- A weakening Japanese Yen could fuel currency wars.
- A US intervention could lead to liquidity injection, fueling the crypto market rally.
As a researcher with experience in the financial markets and a particular interest in cryptocurrencies, I find Arthur Hayes’ perspective on the potential relationship between the weakening Japanese Yen and the crypto market intriguing. The possibility of currency wars and liquidity injections as a result could indeed fuel a rally in Bitcoin and other digital assets.
As a financial analyst, I’ve observed that Arthur Hayes, the founder of BitMEX exchange and the Chief Investment Officer of Maelstrom Crypto fund, has expressed his belief that the weakening Japanese Yen (JPY) could result in increased liquidity and potentially bolster the prices of Bitcoin [BTC] and other cryptocurrencies.
On his latest blog titled ‘Easy Button,’ the exec noted that,
As an analyst, I believe that if USDJPY rises significantly towards the 200 mark, it would be an opportune moment for me to play “The Chemical Brothers” track “Push the Button.”
As a seasoned crypto investor, I’d describe it this way: The “Chemical Brothers” label signifies the collaboration between the US and Japanese markets. On the other hand, “pushing the button” is my shorthand for central banks injecting new funds into their economies or, in simpler terms, printing money.
As I pen this down, the USDJPY exchange rate stood firm at approximately $156. In the current year up to now, the US Dollar has exhibited a robust gain against the Japanese Yen, registering a Year-to-Date (YTD) improvement of 10%.
Viewed from the Yen’s standpoint, the Japanese currency has experienced significant devaluation over the past few months.
How a depreciating Yen could boost crypto
As a researcher studying international economics, I’ve come across Hayes’ perspective that Japan and China’s potential currency conflicts may escalate due to the significant depreciation of the Yen. If this happens, these countries could engage in competitive devaluations, which might lead the US to intervene to maintain its own currency stability.
From a different viewpoint, a declining Yen makes it less expensive for Japan to sell large quantities of merchandise to other countries, giving its exports a price advantage over those from China.
As a countermeasure, China might decide to decrease the value of its yuan (CNY) by increasing its supply of money in circulation. This action could help China preserve its edge in exports and keep the exchange rate between the Chinese yuan and the US dollar (CNYUSD) at a preferred level.
Based on Hayes’ perspective, the United States has the option to boost the value of the Japanese Yen by decreasing the value of the US Dollar through an increase in its supply.
“In order to diminish the strength of the dollar, more of it needs to be made available. Picture Japan requiring a massive influx of one trillion dollars to boost the yen from 156 to 100 in an instant.”
The ripple effect refers to the price hike of assets linked to the US dollar as a result of an expanded US dollar supply. Concurrently, a rise in the value of Yuan (CNY) might trigger a cryptocurrency market upswing.
‘Crypto booms, as there is more dollar and yuan liquidity floating in the system’
As a crypto investor, I believe that Hayes’ prediction of currency devaluation presents an excellent opportunity for Bitcoin to thrive. Bitcoin, being the top-performing asset during times of global fiat currency debasement, is poised to experience an upswing in value.
As a researcher, I’ve noticed that on several occasions, the executive has expressed optimism about the macroeconomic environment potentially leading to a cryptocurrency rally. This is not a new perspective from them.
As a researcher looking back at Hayes’ previous statements, I found that he posited the US elections could inject more liquidity into the US economy. This liquidity surge, according to his perspective, might in turn boost investor confidence and encourage purchases of riskier assets like Bitcoin.
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2024-05-21 22:15