In his newest weblog submit, titled “KISS of Death,” former BitMEX CEO Arthur Hayes outlines a provocative thesis on the trajectory of Bitcoin and broader monetary markets below the renewed presidency of Donald Trump. Hayes—who has lengthy held bullish views on crypto—argues {that a} convergence of fiscal and financial insurance policies may catapult Bitcoin’s worth to as excessive as $1 million throughout the Trump 2.0 period, however solely after a interval of recession-driven turmoil.
Breaking Down Bitcoin’s “KISS Of Death”
Hayes’s framework revolves across the “KISS” precept—Keep It Simple, Stupid—urging market individuals to remain centered on the core driver of asset costs: liquidity. Rather than overreacting to sensational headlines, he contends that one ought to look ahead to shifts within the amount and worth of cash (i.e., how a lot credit score is created and at what rate of interest).
“One day, you buy and then quickly sell after digesting the next headline,” Hayes warns. “The market chops you in the process, and your stack quickly diminishes.” He recommends sticking to an easier outlook: If the U.S. authorities prints vital quantities of cash at decrease charges, threat property like Bitcoin can surge.
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A key premise of Hayes’s evaluation is that President Trump, a “real estate showman” by background, will debt finance his “America First” agenda fairly than embrace austerity. Hayes contrasts Trump with Andrew Mellon—Treasury Secretary below Herbert Hoover—who as soon as allegedly declared: “Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate. It will purge the rottenness out of the system.”
Hayes argues that such a stance could be political suicide for a president searching for to be considered because the Twenty first-century Franklin D. Roosevelt fairly than Hoover. As Hayes places it, “Trump wants to be considered the greatest President ever” and is subsequently inclined to loosen credit score situations fairly than tighten them.
Hayes highlights Trump’s unconventional maneuver to slash federal spending and doubtlessly set off a recession, thereby forcing the Federal Reserve to reply with charge cuts and recent liquidity. The newly fashioned Department of Government Efficiency (DOGE), led by high-profile entrepreneur Elon Musk, is portrayed as an aggressive effort to reveal fraud and cut back waste in authorities packages.
Hayes cites DOGE’s claims that Social Security funds could also be going out to deceased people or unverified identities, supposedly costing tons of of billions—or perhaps a trillion—{dollars} a yr. “Trump and DOGE are firing hundreds of thousands of government employees,” Hayes notes, referencing media stories citing elevated jobless claims within the Washington, D.C., space.
By chopping federal budgets so drastically and so shortly, Trump may—in Hayes’s phrases—“cause a recession or convince the market that one is right around the corner.”
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Once indicators of recession seem, Hayes predicts Federal Reserve Chair Jerome Powell can have little alternative however to chop charges, finish quantitative tightening (QT), and doubtlessly restart quantitative easing (QE) to avert a widespread monetary disaster. Powell, whom Hayes dubs a “turncoat traitor” (a reference to the Fed’s previous charge reduce throughout Kamala Harris’s marketing campaign), is nonetheless certain by the Fed’s mandate to keep up financial stability.
Hayes factors to $2.08 trillion in US company debt and $10 trillion in US Treasury debt that should roll over in 2025. If the financial system slows, rolling that debt over at excessive rates of interest turns into unfeasible. In that situation, the Fed’s solely salvation is recent cash creation and decrease charges.
Hayes calculates {that a} full Fed response—encompassing a number of coverage shifts—may lead to as a lot as $2.74 to $3.24 trillion in new liquidity: Dropping the Federal Funds Rate from 4.25% to 0% may very well be equal to roughly $1.7 trillion of cash printing, in keeping with Hayes’s estimates.
Currently, the Fed conducts $60 billion per 30 days in QT. If QT ends by April 2025, Hayes sees a $540 billion liquidity injection relative to prior expectations. Additional Treasury purchases by the Fed or US industrial banks (the latter aided by a rest of the Supplemental Leverage Ratio) would possibly add one other $500 billion to $1 trillion in greenback credit score.
He compares this to the $4 trillion in stimulus measures throughout the COVID-19 pandemic. Given that Bitcoin jumped roughly 24x from its 2020 lows to 2021 highs in response to that liquidity wave, Hayes says even a extra conservative 10x a number of may very well be in play. “For those who ask how we get to $1 million in Bitcoin during the Trump presidency, this is how,” he proclaims, linking large credit score creation with a sharply increased BTC worth.
Despite his bullish long-term forecast, Hayes believes Bitcoin’s immediate outlook could also be rocky. Hayes sees potential for Bitcoin to revisit the $70,000 to $80,000 vary within the short-term—ranges which are markedly above the prior cycle’s all-time excessive however nonetheless beneath the present market. “If Bitcoin leads the market on the downside, it will also do so on the upside,” Hayes writes, positing that BTC usually bottoms out earlier than conventional equities.
He cites the numerous run-up to $110,000 round mid-January (Trump’s inauguration timeline) adopted by a pullback to $78,000 in late February. “Bitcoin is screaming that a liquidity crisis is nigh, even though the U.S. stock market indices are still near their all-time highs,” he notes. “I firmly believe we are still in a bull cycle, and as such, the bottom at worst will be the previous cycle’s all-time high of $70,000,” Hayes says, underscoring his conviction that any main dips are alternatives to build up fairly than panic-sell.
In Hayes’s view, the “Kiss of Death” isn’t about Bitcoin’s demise however concerning the outdated fiat system struggling to include spiraling debt masses and political brinkmanship. He argues that the short-term chaos in conventional markets—triggered by DOGE-driven spending cuts and a hesitant Fed—will in the end pave the way in which for a brand new spherical of financial growth.
The backside line? Hayes insists that staying centered on liquidity is the very best technique: “Let politicians do politician things, stay in your lane, and buy Bitcoin.”
At press time, BTC traded at $83,725.
Featured picture from YouTube, chart from TradingView.com
