Love him or hate him, when Arthur Hayes speaks, people listen.
Last week, as a guest on Impact Theory with Tom Bilyeu, Hayes made the case why you think the price of bitcoin (btc) will reach between $750,000 and $1 million in 2026.
Hayes said,
“I absolutely agree that there is going to be a major financial crisis, probably as bad or worse than the great depression, sometime near the end of the decade, before we get there we will have, I think, the biggest bull market.” in stocks, real estate, cryptocurrencies, art, you name it, that we have seen since World War II.”
Hayes cites the almost predictable response of the US government, which is quick to intervene in every economic crisis with a bailout, as a key catalyst behind the structural problems of the US economy.
He explained that this essentially creates an endless cycle of printing by central banks, which leads to inflation and prevents the economy from going through natural cycles of growth and market correction.
“We have all collectively agreed that the government is essentially there to try to eliminate the business cycle. Bad things should never happen to the economy, and if they do, we want the government to come in and destroy the free market. So every time we’ve had a financial crisis in the last 80 years. What happens? “The government rushes in and essentially destroys a part of the free market because it wants to save the system.”
Let’s take a quick look at some of the catalysts Hayes believes will support bitcoin‘s move into six-figure territory.
Growing debt and inflation out of control.
According to Hayes, the growing public debt, a large amount that needs to be renewed and declining productivity can only be addressed by printing money. While monetary expansion leads to bull markets, the consequence tends to be high inflation.
“In the first instance, it creates a massive bull market in stocks, cryptocurrencies, real estate, things that have a fixed supply, maybe are productive and have some profits. But after that, we’ll find out that the government can actually save everything. “They can’t just print as much money as they think they can to try to save themselves by fixing the yield and price of their bonds and we are going to have a generational collapse.”
Hayes expects a “massive top” sometime in 2026, followed by a Great Depression-like situation later in the decade.
The United States government bankrupted the banking system.
When asked about future contributors to inflation, Hayes focused on the $7.75 trillion in US debt that must be rolled over by 2026 and the inversion of the US bond yield curve.
Traditionally, China, Japan and other nations were the main buyers of US debt, but that is no longer the case, a change that Hayes said will exacerbate the situation in those states.
Why do I love these markets right now when yields are screaming higher?
Banking models have no concept of an uptrend occurring. Take a look at the upper right quadrant of historical interest rate regimes.
It’s basically empty. pic.twitter.com/P6MQnCU73N
—Arthur Hayes (@CryptoHayes) October 4, 2023
According to Hayes, “the American banking system is functionally insolvent because the regulators set the rules in such a way that it was profitable from an accounting perspective, not an economic one, to essentially take deposits and buy low-yielding Treasury bonds and they could do so. With almost infinite leverage and a few basis points of difference in price change, everyone makes a lot of money and gets a big bonus.”
“The banks collectively bought all these Treasuries in 2021 and obviously the price went down a lot since then and that’s why we have the regional banking crisis.”
The biggest concern expressed by Hayes is that “at a structural level, the US banking system cannot buy more debt because it cannot afford to because it is structurally insolvent. The Federal Reserve has committed to quantitative tightening, so it is not stockpiling more Treasuries.”
Hayes explained that the market is digesting this, and the nuance here is that despite high Treasury rates, gold prices remain high and certain market participants who were previously buyers of Treasuries are not interested. .
Currently, the struggle of banks to attract deposits and the difficulty of matching their deposit rates with the current rates available in the market creates stress on income and debt management to a level that could become critical to the functioning of everything the banking system. Like many cryptocurrency advocates, Hayes believes that it is times like this that a certain group of investors begin to consider different investment options, including bitcoin.
Hayes’ take on why bitcoin is destined for $750,000
Despite what appears to be a generally bleak outlook for the global and US economy, Hayes still expects bitcoin price to outperform, and placed a target estimate in the range of $750,000 to $1 million by the end of 2026. .
Hayes expects bitcoin to continue
“Cut $25,000 to $30,000 this year as we get to some kind of financial disruption and people recognize that real rates are negative. “If the economy is growing at a nominal rate of 10%, but I only get 5% or 6%, even though it’s high, people on the margin will start buying other things, cryptocurrencies being one of those things.”
Looking ahead to 2024, Hayes said either a financial crisis will bring rates closer to 0% or the government will continue to raise rates, but not as fast as governments spend money and people continue to look for better returns elsewhere.
The eventual approval of a spot bitcoin ETF in the US, Europe and perhaps Hong Kong, plus the halving event, could push the price to a new all-time high of $70,000 in June or July 2024. Recovering the all-time high at the end of 2024 is when “the real fun begins and the real bull market begins” and bitcoin enters “750,0000 to $1 million upside.”
When asked if the estimated price level would hold, Hayes agreed that a 70% to 90% drop in the price of btc would occur, just as happens after every bull market.
This article does not contain investment advice or recommendations. Every investment and trading move involves risks, and readers should conduct their own research when making a decision.
