BitMEX founder predicts the growth of BTC as a result of a change in China’s central bank policy

What’s new? Co-founder and former CEO of crypto derivatives exchange BitMEX Arthur Hayes predicts in his new article titled “Let’s Go Bitcoin” that China’s central bank will shift to a quantitative easing (QE) policy, as well as take other economic stimulus measures to combat deflation, which will fuel bitcoin’s rise. According to entrepreneur’s thoughts, the increase in money supply in the Chinese economy will lead to BTC being used as a hedge against the depreciation of the national currency.

Hayes’ blog

What else is known? Hayes notes that the massive changes in China are caused by the bursting of the real estate market bubble, something like this was already experienced by Japan in 1989, America in 2008, and the EU in 2011. In China, this situation was triggered by the restriction of lending to real estate developers in 2020 as part of the “three red lines” policy.

As a result, the Chinese economy, like other affected countries before it, has moved into recession, with firms and households reducing economic activity and demand for credit. To solve this problem, Hayes said, the central bank must recapitalize the banking system and flood the economy with money by buying back government debt with newly printed banknotes.

According to Hayes, there are signs in recent statements by authorities that China is willing to change monetary policy to counter deflation.

The US Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of Japan (BOJ) all started QE by buying government bonds in small amounts but later printed a lot of money to get out of the deflationary trap. China’s central bank, according to Hayes, will do the same and print tens of trillions of yuan to expand the economy.

In addition to quantitative easing by the central bank, banks will need to lend again to ensure high GDP growth.

“Given that the Chinese property bubble was the largest in human history, the amount of yuan credit created will rival the sum of dollars printed in the US in response to COVID in 2020-2021,” Hayes states.

The entrepreneur notes that the growing money supply will eventually create the threat of inflation, prompting citizens and companies to invest in risky assets for hedging purposes. Most popular among them will be bitcoin as the most reliable safe haven asset, Hayes believes.

“That means that Bitcoin will soar on a secular basis as China reflates its banking system and property sector,” the article says.