China QE Could Spark 500% Bitcoin Boom — Bold Analysis by Arthur Hayes

China QE: Pros and Cons of Bitcoin 

China’s economy still has not returned to stable growth despite the collapse of the real estate industry, which was a key pillar of the economy. In response, the People’s Bank of China (PBOC) continues to employ an assertively accommodative monetary policy to infuse the credit market and restore financial order. Hayes points out that such steps could lead to chain reactions that would eventually lead to more demand for things such as BTC.

He says that every time a government seeks to expand the supply of its money, then assets which are relatively not bound to fiat money, like bitcoins, are likely to rise in value. “So long as fiat money is created, Bitcoin will rise,” No matter who the final beneficiary is,” Hayes said in his article post. This statement summarized his view about the cronyism of Bitcoin, which may turn out to be the preferred tool for wealth preservation in the light of currency pulverization.

Hayes also pointed out that the expansion of China QE could catalyze credit expansion, which the country needs to strengthen its banking sector. “Since the Chinese property bubble was the largest asset bubble in human history, the yuan credit created will be nearly equal to the USD printed in the US in response to COVID in 2020-2021,” he added.

Bitcoin’s Role as a Safe Haven Asset 

Hence, while Bitcoin has often been referred to as “digital gold,” it is an asset that has a fixed supply. Bitcoin carries no physical risk of a central authority manipulating it hence proving viable for those investors willing to hedge against inflation and deterioration of currency value. According to Hayes, China QE can solidly underpin Bitcoin as a safe-haven asset as wealthier Chinese citizens will seek the means to preserve their purchasing power.

Hayes wrote that the main reason why many people are attracted to Bitcoin is due to its ability to resist debasement. They noticed that although China has banned both the exchanges that offer Bitcoin and trading pairs, it has not prohibited the possession of the virtual currency while the demand for it surged in the black and P2P markets. Hayes thinks that Beijing could be comfortable with hiding BTC and similar assets from the population and not actively defy the currency system.

Could China QE Trigger a Massive Bitcoin Rally? 

In Hayes’s view and as a peer of China’s monetary policies, Bitcoin still has the potential for profound appreciation. He said that he saw a similar event in August 2015 when a devaluation of the yuan by the PBOC caused the price of Bitcoin to spike by fourfold within three months. Hayes believes that due to lower interest rates and more extensions similar to China QE, China can have a similar impact.

However, he also urged caution and said that it might be relatively long before the effects of China QE policies could be witnessed. “It will take time before PBOC QE and further reacceleration of banking credit growth can be achieved,” he said. Based on this analogy, it is implied that the impact of China QE on Bitcoin might be incremental, with a big upward move possible if the wealthy wish to dump their holdings and acquire Bitcoin in big quantities.

According to Hayes, once such a move occurs, fresh inflation and subsequent deflation may cause Bitcoin to have significant flux, similar to what has previously been characteristic of periods of currency devaluation and higher demand. “When the typical bougie coastal Zhou who wakes up one day deciding they need Bitcoin at any yuan price, the price swings back to the August 2015 type,” he said.

Conclusion on China QE

China QE: As another thesis on how China QE attempts in China may provide the catalyst to a surge in the price of Bitcoin, Arthur Hayes turns in an interesting shift that any investor should hope to get. Since China is using its monetary policy to support its economy and deal with the property sector collapse, a Bitcoin boom seems to be possible. Hayes’ predictions are also pointing to increasing bitcoin adoption as an insurance against global economic risks and currency devaluation efforts.