Bitcoin and Cryptos Set for Significant Price Swings as China and the Fed Signal Monetary Moves
The crypto market, including major players like Bitcoin, Ethereum, and XRP, has experienced a notable surge this year, with an unexpected crypto-based AI initiative from Ethereum founder Vitalik Buterin adding to the excitement.
Over the past 12 months, the Bitcoin price has more than doubled, and anticipation is building within the market for a potential seismic shift on Wall Street that could propel Bitcoin, Ethereum, XRP, and the overall crypto market to new heights.
Renowned Bitcoin and crypto trader Arthur Hayes, currently serving as the Chief Investment Officer at investment fund Maelstrom, has made a bold prediction. Hayes suggests that China is on the verge of injecting the world with an abundance of yuan credit—a move that he believes will flow into tangible assets like Bitcoin.
Hayes points to growing expectations that the Federal Reserve is poised to unwind its tight monetary policy. This, in turn, could lead to a weakening U.S. dollar, creating an opportunity for China to implement a substantial round of stimulus. The objective would be to revitalize its property market and boost infrastructure spending, given the recent stalling of China’s struggling economy.
In a macroeconomic perspective, Hayes emphasizes that if the dollar’s price of credit drops, all fixed supply assets, such as Bitcoin and gold, will experience a rise in dollar fiat price terms. Importantly, Hayes notes that this bullish trend doesn’t necessitate direct purchases of Bitcoin by Chinese firms or individuals. The fungible nature of global fiat credit is expected to guide the marginal fiat dollar towards hard monetary assets like Bitcoin.
Simultaneously, the crypto market may see a comparable effect from the increase in the circulating supply of stablecoins—marking the first such increase in over a year. Stablecoins, which have declined consistently since May 2022, are experiencing a 3.4% uptick in November.
Grzegorz Drozdz, a market analyst at Conotoxia, suggests that this increase in virtual money circulating in the system could have a similar impact on Bitcoin, Ethereum, XRP, and other cryptocurrencies as central bank money printing. The previous scarcity of new funds might have contributed to a shortage of investment capital, resulting in a weakened market with reduced trading volumes. The current rebound signals a potential influx of new funds into the market after 1.5 years.