On Friday (June 2, 2023), BitMEX’s Co-Founder and ex-CEO, Arthur Hayes, shed light on the puzzling question many crypto enthusiasts have been asking: Why hasn’t Bitcoin’s price shot up amid the ongoing U.S. banking crisis?
Hayes, a respected voice in the crypto realm, is known for his deep understanding of market dynamics. He took to his blog, giving readers a fresh perspective on the issue, aiming to quell the growing uncertainty around Bitcoin’s rather placid performance.
Contrary to popular expectation, Bitcoin, the proverbial hedge against traditional financial instability, hasn’t made an astronomical surge. According to Hayes, this counter-intuitive behavior can be attributed to a set of nuanced factors.
Firstly, he argues that we’re witnessing an immediate “flight to safety” response. During periods of uncertainty, investors usually rush towards traditional safe havens – most notably, the U.S. dollar. While the U.S. dollar is ironically the epicenter of the ongoing banking crisis, it remains the world’s reserve currency and symbolizes safety and security for many.
Secondly, Hayes points out that the crisis hasn’t reached its peak. It’s important to understand that market movements are seldom linear. At the moment, the priority is liquidating volatile positions to meet obligations. But as the crisis matures, the demand for safety will progressively diversify. This shift could direct more investors towards alternatives like Bitcoin.
Hayes also identifies timing as an influential factor. The modern financial system is complex, and its movements are intricate. The repercussions of a crisis aren’t immediate and often need a gestation period before manifesting visibly in various asset prices, including Bitcoin.
In addition, the concept of Bitcoin as a “digital gold” is still nascent. While many within the crypto space ascribe to this belief, the broader market might not share the sentiment entirely. Hayes reminds us that it will take time for Bitcoin to fully realize its potential as a hedge against financial uncertainty.
Finally, the ex-BitMEX CEO emphasizes patience. Observing the long-term trajectory, Hayes affirms his belief in Bitcoin’s role as a safeguard against financial turmoil. In the grand scheme, Bitcoin is a young asset. He urges investors to weather the initial turbulence and anticipate when it will begin to reflect its true value.
This paragraph is perhaps the best takeaway from Hayes’ long (but as always interesting) blog post:
“Money printing, yield curve control, bank failures, etc. will all come to pass, starting in America and eventually spreading to all major fiat monetary systems. The goal of this essay is to explore why I believe the fireworks and the real Bitcoin bull market will begin in the late third and early fourth quarter of this year. Between now and then, chill the fuck out. Take a vacation, and enjoy nature and the company of your friends and family. Because come this fall, you better be strapped into your trading spaceship, ready for liftoff.“