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Bitcoin Is a Superior Safe Haven in the Current ‘Inflationary Era,’ Says Arthur Hayes
Bitcoin billionaire and BitMEX co-founder Arthur Hayes explained historical economic cycles and their implications for the current market environment in his latest blog postarguing that the current economic landscape is characterized by a local inflation cycle. This makes Bitcoin a superior safe haven asset compared to gold, due to its independence from national control.
He separates business cycles into local and global periods. In a local period, he wrote, authorities often resort to financial repression to finance wars and other significant expenditures, resulting in inflation. In contrast, a global period is characterized by deregulated finance and promotes global trade, leading to deflation.
Hayes believes we are currently in a local cycle driven by inflationary pressures and geopolitical tensions.
“The world is moving from a unipolar world order ruled by the United States to a multipolar world order that includes leaders like China, Brazil, Russia, etc.,” he wrote.
This shift contributes to the current inflationary environment, in which nations are turning inward and prioritizing domestic economic stability.
He further elaborated on the investment implications of these cycles, stating, “If you don’t believe in the system or those who govern it, invest in gold or another asset that doesn’t need any trace of the state to exist, like Bitcoin.”
Source: Arthur Hayes
According to him, the decentralized nature of Bitcoin and the speed of transactions make it a more attractive option than gold in the current economic environment.
Hayes provides historical context, describing how past cycles have influenced investment choices.
From 1933 to 1980, the Pax Americana Ascending Local Cycle saw the US economy grow while funding wars through financial repression. In contrast, the Pax Americana Hegemon Global Cycle from 1980 to 2008 was characterized by deregulation and a stronger dollar, favoring stock investments over gold.
In the current cycle, which began in 2008, Hayes highlights the emergence of Bitcoin as a significant development.
“The problem is that at the beginning of the current local cycle, Bitcoin offered another stateless currency,” he wrote.
Unlike gold, Bitcoin is managed via a cryptographic blockchain, allowing for faster and more secure transactions. This distinction has allowed Bitcoin to surpass gold since its inception.
Hayes further argued that the current local inflation cycle and geopolitical tensions make Bitcoin a more reliable store of value than traditional assets like gold.
He stressed the importance of understanding these cycles to make informed investment decisions.
“We know we are in an inflationary period and Bitcoin has done what it was supposed to do: outperform stocks and fiat devaluation. However, timing is everything. If you bought Bitcoin at the recent all-time high, you may feel like a beta cuck because you extrapolated past performance into an uncertain future,” Hayes wrote, emphasizing the importance of strategic timing in investment decisions.
Source: Arthur Hayes
Looking ahead, Hayes predicts a shift in credit allocation, stating, “The way Pax Americana and the collective West allocate credit will resemble that of the Chinese, Japanese, and Koreans.”
It advises investors to monitor “fiscal deficits and the total amount of non-financial bank credit” as key indicators.
By Stacy Elliott.