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The US dollar reserve system declines
BitMEX Arthur Hayes published an article saying: “The era of U.S. Treasury bonds (and relatively lighter U.S. stocks) as global reserve assets is over. Since Nixon decoupled the U.S. dollar from gold in 1971, the total U.S. Treasury bonds have increased by 85 times.
The United States has to create a credit currency that matches global economic growth.This is good for some Americans, but negative for others.Trump’s election is driven by groups who think they have not shared the ‘prosperity’ of the past 50 years.
Once the current account deficit in the United States is eliminated, foreigners will not be able to get US dollars to buy U.S. bonds and stocks.
If countries begin to turn to a ‘national priority’ policy that boosts their economies, they will sell their holdings of U.S. bonds and U.S. stocks to gain liquidity in their currency.
Even though Trump later softened his tariff stance, no Treasury secretary or head of state dared to bet that he would not repeat it again.Therefore, it is impossible for the world to return to the same state as before.Every country must fight for itself.
Gold will return to the stage as a neutral reserve asset.The US dollar will remain the global reserve currency, but countries will settle global trade by holding gold.
Trump has hinted that it is because gold is tariff-free!In the new monetary system, gold must be circulated freely and at low cost.
Nowadays, most of those who have benefited greatly from the old system are still in the stage of denial, and they are immersed in a fantasy: everything will eventually return to ‘normal’, which is extremely absurd.
Those who want to adapt to the global trade order that returned to 1971 should buy gold, gold mining companies and Bitcoin (BTC).”
Decoupled from US stocks
He also said that the latest generation of U.S. stock investors are too used to structural upward bull markets.This is more like an exception than a global norm, and there are many examples that stocks continue to 10 years of horizontal/range volatility even with a good potential economic growth.
The market is expected to provide the perfect environment for the type of trader that can adapt quickly and thrive, but for many privately oriented strategies, the market will be extremely pessimistic.If Trump continues his policy choices, the expected returns for PE and VC should drop significantly.
Bitcoin holders need to learn to love tariffs, and Bitcoin may have escaped its correlation with the Nasdaq and may be transformed into the purest fiat currency liquidity warning indicator.
Global economic imbalances will be alleviated by printing money, which is good for the medium-term performance of Bitcoin and gold.
In addition, Arthur Hayes pointed out that the dollar is weakening, with foreign investors selling U.S. technology stocks and transferring funds back to their home countries.
He predicted that the Fed could cut interest rates soon and restart quantitative easing to cope with the economic impact, and suggested that the Bank of Japan expand QE through a weak yen policy, push the U.S. dollar against the yen to above 160, and stressed the importance of maintaining patience, flexibility and liquidity.
It can be said that Federal Reserve Chairman Powell is trapped in a fiscal-dominated “forced obedience” pattern, and his shift to loose monetary policy is inevitable.He stressed that the Fed will be forced to restart quantitative easing (QE) to pay for the huge fiscal deficit in the United States, and the rebound in US dollar liquidity will push Bitcoin to strengthen.
Hayes analyzed that although the market is still arguing about the pros and cons of tariffs, what is really worth celebrating in the crypto market should be the return of QE.He expects the process to begin this summer, noting that the Fed’s slowdown in QT pace is a signal.
He concluded that fiscal dominance means the Fed will abandon independence and prioritize ensuring that the government can raise funds at affordable rates, which is the core reason for the high inflation.Faced with a new round of fund release, Bitcoin will benefit from its “digital gold” attribute in the long term.
