Arthur Hayes envisions the potential initiation of a substantial infusion of credit into China’s economic landscape by its monetary authorities. This strategic move could fortify both bitcoin and the wider cryptocurrency sphere.

In a blog post on Monday, the co-founder of BitMEX articulated his anticipation. He expressed the expectation of China intensifying its participation in the burgeoning crypto bull market.

Hayes dissected a convergence of factors that might propel China into deluging the global financial arena with yuan credit, foreseeing a positive repercussion on bitcoin.

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Navigating the dynamics between the U.S. dollar and the Chinese yuan, the erstwhile BitMEX CEO expounded on prevailing U.S. monetary policies.

He detailed how these policies are creating conditions. This, in turn, is paving the way for Chinese authorities to unleash “substantial quantities” of fresh credit. The focus is particularly on rejuvenating its beleaguered real estate sector. Characterizing recent U.S. policies as undermining the dollar through increased issuance of Treasury bills.

Hayes observed the tangible aftermath in the form of a dip in the dollar index, DXY, throughout November. According to Hayes, the enfeebled state of the dollar grants Chinese authorities a more expansive arena to operate the yuan money printing apparatus. He contended;

“Despite China fervently activating its money printer, in relation to the dollar, the yuan’s value will, at the very least, remain constant, possibly even appreciate.”

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Anticipating a scenario where the yuan gains strength amid the dollar’s continued depreciation, Hayes posited a potential outcome. He indicated that, under these circumstances, China would have the latitude to substantially escalate onshore yuan credit.

Importantly, this escalation would occur without causing a depreciation of the currency. In Hayes’s view, this global monetary interplay could prove advantageous for bitcoin and the broader cryptocurrency market. He stated;

“Should China commence yuan printing, it will permeate global markets, buttressing the valuation of various risk assets.”

Highlighting potential avenues, he suggested an influx of capital into risk assets from mainland China, utilizing Hong Kong as a conduit.

“If there exists a legitimate channel to transfer funds from mainland China to Hong Kong, bitcoin stands as one among numerous risk assets to be procured,” Hayes added.

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Furthermore, with a surplus of yuan credit, he envisioned a decrease in global demand for dollar credit and liquidity.

“Considering the dollar’s role as the world’s predominant funding currency, a decline in credit prices will propel the ascent of fixed-supply assets such as bitcoin and gold in dollar valuation,” he expounded.

In conclusion, the BitMEX co-founder emphasized his preference for crypto investments over U.S. Treasury bills. He pointed to the current landscape, highlighting the favorability towards risk assets. This decision reflects his strategic response to the analyzed market conditions.

“I am diverting funds away from T-bills to crypto, positioning myself ahead of the evident data illustrating China’s assertive use of the money printer,” he affirmed.

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