- Arthur Hayes says the cryptocurrency fall rally will be driven by Chinese traders.
- According to the BitMEX co-founder, a depreciation of the yuan due to massive credit issuance will bring capital into the cryptocurrency market.
- “Hong Kong will be the conduit through which Chinese capital will be allowed to own cryptocurrencies,” he said.
Arthur Hayes, co-founder and former CEO of crypto exchange BitMEX, believes the next crypto market rally will be shaped by Chinese traders.
In his opinion published in his latest book, blog postHayes stresses that the current crackdown on cryptocurrencies by the U.S. Securities and Exchange Commission (SEC) could be a negative trigger. This could further disrupt and crate the cryptocurrency market.
However, according to the entrepreneur, it is China, not the United States, that can hold the baton as cryptocurrencies head into the next bull market. And one trigger that should be noted is the “return of Chinese traders” amid the depreciation of the Chinese yuan.
“The return of Chinese crypto traders through Hong Kong financial pipes will reignite the market as the penniless American mass wealthy are effectively shut out.‘” Hayes wrote in a blog post published on June 16.
Hayes explains how China will lead the next bull market
The current market landscape looks a lot like the “nuclear bear market” triggered by the Mt Gox implosion in the summer of 2015.
Just like then, the 2022 bear market, which included the FTX collapse, increased volatility, dried up trading volume, and made sideways price action excruciatingly boring. In fact, compared to 2015, when the Bitcoin price was trading close to $200 for a long time, 2023 will see the price hover below $30,000 since the November 2022 crash.
“But in August 2015, the People’s Bank of China (PBOC) suddenly made a “shocking” devaluation against the US dollar, sparking a surge of Chinese interest in bitcoin. Between August and November 2015, the price of Bitcoin tripled as Chinese traders pushed the market higher. I think something similar could happen in 2023said Hayes.
The BitMEX co-founder said he sees the above coming as the world’s second largest economy embarks on a maniacal credit spree. On why selling now is “misguided” amid concerns over the US regulatory environment. why?
“At some point the sale stops and then something horrible happens.Boring sideways price swings will reign until something jumps and rocks the souls of crypto traders”
According to him, the trigger will be a depreciation of the renminbi due to a slowdown in the Chinese economy and the subsequent printing of banknotes, which will lead to massive inflows into cryptocurrencies. he explained:
“The slower the growth of the Chinese economy, the more credit will be issued. Afterwards, the currency will depreciate, allowing capital to “escape” to appropriate means, and finally giving the crypto capital markets the impetus to start the fall rally.”
To help depreciate the currency, Hayes said the People’s Bank of China (PBOC) will seek to promote credit-growth sectors of the economy deemed “good.” These areas include semiconductors, artificial intelligence (AI), clean energy and real estate. The People’s Bank of China will allow these “good” sectors to access higher loan quotes, and banks will be “directed to lend a certain amount of renminbi to these sectors.”
The depreciation of the yuan and a focused approach to attracting cryptocurrencies and blockchain to Hong Kong will be key factors, he added. The perfect trajectory for HODLers. The cryptocurrency bulls summarized their market outlook as follows:
“I have predicted this before and continue to believe that Hong Kong will be the conduit through which Chinese capital will be allowed to own crypto financial assets.”
