Arthur Hayes argues that Bitcoin’s widely cited four-year halving cycle has broken down and that macro liquidity—not protocol mechanics—will dictate the next leg of the market. In a recent essay entitled “Long Live the King!” Published on October 9, 2020, BitMEX’s co-founder argues that Washington and Beijing have chosen policies that will create a money system that is structurally more lenient, which should continue to push BTC upwards, even though many traders are looking for the textbook cycle peak. “The four-year anniversary of this fourth cycle is upon us,” He writes but the people who apply the old pattern “miss why it will fail this time.”
The Bitcoin cycle of four years is dead
Hayes’ framework Bitcoin USD values rise and fall with dollar liquidity. “Bitcoin in the current state of human civilization is the best form of money ever created,” Despite what he claims, the dollar price is still there “will ebb and flow because of the price and supply of dollars.” He extends his lens to China and argues that historically, the yuan’s credit impulse has amplified crypto cycles or dampened them. alongside US conditions.
Hayes’s analysis of four historical periods reveals that dollar and yuan liquidities have changed dramatically at each point. The “Genesis Cycle” (2009–2013) rode post-GFC quantitative easing and a surge in Chinese credit until both decelerated into 2013, “popp[ing] the Bitcoin bubble.”
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It is important to note that the word “you” means “you”. “ICO Cycle” (2013–2017) It was driven less by dollars and more by “a fuck ton of yuan sloshing around the global money markets,” The China credit surge peaked in 2015, amid the devaluation of the yuan. However, tighter lending standards and rising U.S. interest rates stopped the trend. This is the “COVID Hoax” period (2017–2021)—Hayes’ label for the pandemic-era policy response—saw “helicopter money” Under President Donald Trump, a rapid double of the dollar supply and rates set at zero pushed all risk assets including cryptocurrency until inflation forced tightening late in 2021.
Current “New World Order” phase (2021–?Hayes claims that liquidation plumbing is not the solution to the 2021-? halvingsBitcoin’s resilience is explained by its volume. The US Treasury issued short-dated bills which led to the Fed’s reverse repos facility being drained. “unleashed ~$2.5 trillion of liquidity into the markets,” And he describes this as being a matter of political choice. “run the economy hot.”
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This is how he links today’s setup to macro pivot: “The Fed resumed cutting interest rates in September even though inflation is above its own target,” While the Administration seeks to “lower the cost of housing” Banks should relax their regulations in order to increase lending. “critical industries.” Hayes’ interpretation of the political signals is unambiguous. “money shall be cheaper and more plentiful.”
China won’t repeat the credit booms that occurred in 2009 and 2015 but it won’t also be a drag. Hayes predicts that Beijing will be able to deal with the pressures of deflation and an upcoming property sector reckoning. “When the economic pressure proves too intense… Chinese policymakers print money.” According to him, the end result is that China will not likely be the driving force behind global fiat. “but it won’t hinder it either.”
The thesis that has always held true is that cycles are monetary cycles with different masks. Bitcoin’s early peaks coincided in a decline of dollar and Yuan liquidity. Its latest rise reflects an alignment of new political priorities, with easy money, regardless the halving of calendar.
Hayes is blunt: “Listen to our monetary masters in Washington and Beijing. They clearly state that money shall be cheaper and more plentiful. Therefore, Bitcoin continues to rise in anticipation of this highly probable future.” In his final line, he claims that the metaphor of coronation is true: “The king is dead, long live the king!”
BTC was trading at $122,147 as of the time this article went to press.
Featured Image created using DALL.E and chart from TradingView.com
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Source: www.newsbtc.com
