The co-founder of the popular cryptocurrency derivatives exchange BitMEX, Arthur Hayes, has recently revealed assuaged concerns about a stalled cryptocurrency bull market by pointing to burgeoning U.S. credit conditions, and suggested investors should “zoom out” to focus on the “broader cyclical trend.”

Hayes, a prominent voice in the crypto space, argued in a recent Medium post that historical economic trends suggest Bitcoin is poised for another significant price surge within this market cycle.

Despite Bitcoin’s recent stagnation, he maintains confidence in the leading cryptocurrency’s ability to “regain its momentum” due to the sheer volume of government spending and money printing in the United States.

The crypto analyst proposed a framework for understanding economic cycles, dividing them into local inflationary periods and global deflationary ones. Since the 2008 financial crisis, Hayes contends that the United States has been in a local inflationary period, characterized by quantitative easing measures implemented to stimulate the economy.

In these local inflationary periods, Hayes advocated for holding gold as a store of value, particularly for those disillusioned with the financial system and its leadership. However, the dawn of the current economic era also witnessed the birth of Bitcoin in 2009, a cryptocurrency that to Hayes surpasses gold in several key aspects, including its finite supply and instant transferability.

While the Federal Reserve has raised interest rates and reduced its holdings in recent years, Hayes suggested that credit continues to expand in other parts of the economy. This expansion, he argues, undermines the central bank’s efforts to combat inflation and continues to fuel the value of Bitcoin and other assets.

The co-founder of BitMEX noted that attention should be paid to the amount of credit created by commercial banks, which do so by “loaning money to non-financial businesses.” Fiscal deficits, he said, also emit credit financed by the government debt that commercial banks have to purchase.

Hayes then cited a Congressional Budget Office report projects deficit will reach a record breaking $1.915 trillion, excluding the COVID-19 era:

The U.S. budget deficit is projected to surge to $1.915 trillion in fiscal 2024, exceeding last year’s $1.695 trillion and marking the highest level outside the COVID-19 era, according to a federal agency that attributed the 27% increase compared to its earlier forecast to higher spending.

He concluded by saying that he believes “fiscal and monetary conditions are loose and will continue to be loose, and therefore, hodl’ing crypto is the best way to preserve wealth.”

Featured image via Pixabay.