‘Why Hold Dollars?’ Arthur Hayes Says That A Cracking Financial System Could Be Bullish For Bitcoin

• According to Hayes, geopolitical tensions, including the U.S.-Iran conflict, are beginning to strain the global trade system that supports dollar demand.
• The BitMEX founder forecast that countries may gradually reduce reliance on U.S. Treasuries and diversify into other reserve assets like the yuan or gold.
• He said reduced foreign demand for U.S. assets could force the Federal Reserve to expand the money supply further, which would be bullish for Bitcoin.

BitMEX founder Arthur Hayes said a repeat of the 2008 financial crisis is unlikely, but the global economic system is slowly fracturing in ways that favor crypto and Bitcoin (BTC).

“The Fed outlawed regional banks from failing… that’ll never happen again,” Hayes said in a interview with Kyle Chasse, arguing that authorities will always step in with liquidity to prevent systemic collapse. According to him, modern markets are effectively backstopped by central banks and governments.

However, amid the turbulence caused by the U.S.-Iran war, Hayes stated that the global trade system underpinning the U.S. dollar is weakening. “If it ain't as easy as it was, why do I hold dollars?” he asked, questioning the core incentive behind global dollar demand. The U.S. Dollar Index (DXY) edged 0.12% lower in morning trade on Friday, and has fallen over 1% in the last 12 months. 

Dollar Demand In Question Amid US-Iran War

Hayes said that if the U.S. dollar isn’t frictionness, then it could have long-term consequences. He opined that if countries no longer trust the system to deliver goods efficiently, they may reduce their reliance on U.S. Treasuries and instead turn to alternatives like the yuan, gold or other currencies.“We’ll wake up in a few years… and see the flows,” Hayes said, suggesting the change will be gradual but significant: 

And thus, the Federal Reserve will eventually print more money. “If the units of fiat are not coming from savings from abroad… then they must come from the printing press,” he added.

According to Hayes, the crypto market, especially Bitcoin, is in a bullish setup. He reiterated that a world of persistent money printing and weakening fiat systems creates the perfect conditions for digital assets to thrive.

Bitcoin’s price edged 0.7% higher in the last 24 hours to around $78,100. Retail sentiment around the apex cryptocurrency on Stocktwits trended in ‘bullish’ territory over the past day, but chatter dipped to ‘normal’ from ‘high’ levels. 

Read also: HOOD, COIN Stocks Gain Despite Fresh Lawsuit Calling Prediction Markets A ‘Public Nuisance’ – Challenging CFTC Authority

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