As global wartime inflation looms, experts predict that a staggering $25 trillion shock could prompt an unexpected flip by the Fed, potentially triggering a remarkable price boom for cryptocurrencies like Bitcoin, Ethereum, XRP, and other digital assets, with a potential for reaching $1 million valuations.
This week has been a rollercoaster for major cryptocurrencies like Bitcoin, Ethereum, and XRP, with prices skyrocketing. However, the market could be in for more shake-ups next week due to potential actions by U.S. President Joe Biden. To navigate these uncertain times, subscribing to Forbes’ CryptoAsset & Blockchain Advisor could be helpful.
Over the past year, the Bitcoin price has doubled, making a remarkable recovery after the collapse of major exchange FTX. But there could be an even bigger shock waiting around the corner. According to renowned Bitcoin and crypto trader Arthur Hayes, the arrival of “global wartime inflation” could trigger a massive bull run, pushing the Bitcoin price to $1 million.
Hayes points to the potential escalation of the war between Israel and Hamas in Gaza, which could cause the U.S. military budget to explode. This would lead to increased government borrowing and fears of global wartime inflation. In such a scenario, investors may seek alternatives to long-term U.S. Treasury bonds, such as gold and Bitcoin.
The U.S. government bond market has experienced extreme volatility recently, causing panic on Wall Street as yields on 10-year U.S. Treasury notes reached their highest level in 16 years. Central banks worldwide, including the U.S. Federal Reserve, have been grappling with soaring inflation resulting from extensive money printing and supply shocks during the COVID-19 pandemic. The Fed’s efforts to control inflation by hiking rates have caused chaos in the Bitcoin, crypto, and stock markets over the past two years.
Hayes believes that when yields get too high, the Fed will abandon the notion of a free market in the U.S. Treasury market, instead fixing interest rates at politically convenient levels. This realization could trigger a full-blown bull market for Bitcoin and cryptocurrencies. Hayes suggests rotating out of short-term U.S. Treasury bills and into crypto as a strategy.
While this prediction offers an interesting perspective, other market watchers are keeping an eye on the upcoming Federal Reserve Federal Open Market Committee (FOMC) interest rate meeting next week. The market’s atmosphere could drastically change based on the Fed’s actions. Recent economic data indicate the strength of the U.S. economy, so it is likely that the Fed will keep its policy rate unchanged. However, Federal Reserve Chair Jerome Powell may try to counter the market’s expectation that rate hikes are over. This could lead to another rise in treasury yields, potentially affecting Bitcoin’s price.
Overall, the crypto market remains uncertain, and it’s essential to stay informed and prepared for potential market fluctuations. Subscribing to Forbes’ CryptoCodex, a free daily newsletter for the crypto-curious, can help you navigate these turbulent times.