In a new essay, ex-CEO of BitMEX Arthur Hayes told which investors are the most "reasonable" and pointed out the factors of further growth of the cryptocurrency market.
\"Left Curve\" is an essay on why you aren't bullish enough about #crypto. It's time to shut your eyes and BTFD!https://t.co/0pQyOjZhPS pic.twitter.com/r9QUiGYZTG
— Arthur Hayes (@CryptoHayes) April 23, 2024According to him, there are traders who are proud that they managed to "buy Solana for $10 and sell it for $200." However, the truly visionary investors are those who adhered to the "left curve" mindset during the bear market of 2021-2023.
This approach involves buying and storing digital assets, especially the first cryptocurrency, until the highs of the bull cycle, Hayes explained.
"Bitcoin is the hardest money ever created. If you sold shitcoins for fiat, which you don't need for living expenses right now, then you're screwed. Traditional money will be printed indefinitely until the system restarts," he added.
Escape from the outside world
The businessman noted that major economic powers like the United States, China, the European Union and Japan deliberately reduce the value of their own national currencies to repay the national debt.
At the same time, TradFi got the opportunity to profit from this situation through bitcoin-based spot exchange-traded funds, Hayes drew attention.
As a result, institutions urge clients to protect assets from currency devaluation. As the former head of BitMEX explained, the influx of institutional investments enhances the growth of the crypto market, thereby confirming the idea of a "saving asset":
"The macroeconomic situation that caused a surge in fiat liquidity and contributed to the rise of bitcoin will become even more pronounced when the sovereign debt bubble begins to burst."
Hayes also discussed the concept of gross domestic product (GDP), which includes inflation and real economic growth. He claims that governments are borrowing money to finance projects, hoping to "accelerate the pace of development and attract investors with promising returns."
However, politicians often manipulate the system by keeping government bond yields below GDP growth rates. This allows you to spend more without raising taxes, but leads to stock and economic stagnation, the entrepreneur said.
The right choice
According to Hayes, the most important task for investors is to understand whether government bonds are a good investment. To do this, it is necessary to compare the nominal annual GDP growth rate with the yield of 10-year government bonds:
"Real yield = yield of 10-year government bonds – nominal GDP growth rate. When real yields are positive, government bonds are a good investment. When real yields are negative, government bonds are a terrible choice."
The main "trick" is to find assets outside the banking system that can grow faster than inflation, according to the former CEO of BitMEX.
Hayes reviewed the USNOM index, which tracks real U.S. yields and the Fed's balance sheet. According to the chart, after the deflationary shock of the global financial crisis in 2008, the indicator changed from positive to negative.
The USNOM index. Data: Hayes' blog."With the exception of 2009 and 2020, government bonds were terrible investment decisions compared to stocks, real estate, cryptocurrencies and so on. Bond traders succeeded only because they pumped up their trades with insane leverage," the expert stressed.
The co-founder of BitMEX argues that the polarized political landscape in the United States in the run-up to the presidential election will only exacerbate the weakening of state assets.
As both major parties compete for power and plan extensive spending programs, the incentive to maintain negative real returns and promote uncontrolled borrowing will increase, he said.
"Bitcoin was and remains a lifeline for this period. It grows in a non-linear way on a logarithmic graph. Its dynamics are manifested due to the limited number of coins, the value of which is expressed in depreciating fiat dollars," Hayes said.
Summing up, the crypto trader advised to take advantage of the opportunity provided by the recent market correction and gradually increase the cryptocurrency portfolio ahead of the summer:
"I urge all degenerates to the left curve. Your guess that money printing will accelerate as politicians spend money on handouts and wars is correct. Do not underestimate the desire of the current elites to remain in power. If the real rates turn positive, reassess your confidence in cryptocurrency"
Earlier, Hayes allowed bitcoin to fall after halving, which took place on April 20. In his opinion, the event in the medium term is a bullish catalyst for the crypto market.
Recall that in the ForkLog comment, experts explained the post-trading dynamics and predicted further developments.