Arthur Hayes: What is the Truth About Trump? Which Assets Should Be Positioned in Advance?
Arthur Hayes, the founder of BitMEX, has published a lengthy article titled “Trump Truth,” analyzing how Trump’s policies after taking office will profoundly impact the global economy, particularly in terms of monetary policy and financial markets. He predicts how the United States, Japan, China, and Europe will respond to the “Trump Truth,” and how these changes will drive the growth of Bitcoin and the cryptocurrency market.
What is the truth of Trump Truth?
Arthur Hayes compares the elected President of the United States, Donald Trump, to a tool for revealing the truth, which aligns with the name of his social media platform, Truth Social. The Trump Truth can disclose the real situations of various countries concerning geopolitical and economic issues. He believes that Trump’s bluntness forces other national leaders to acknowledge and confront the problems they face.
What is the truth of the United States?
Trump aims to achieve the reindustrialization of America by weakening the dollar, providing tax subsidies, and relaxing regulations.
What will the dollar depreciate against?
Trump and the incoming Treasury Secretary, Mnuchin, have repeatedly discussed the need to weaken the dollar to meet America’s economic goals. The question is, against what should the dollar depreciate, and when?
The United States holds 8,133.46 tons of gold, the largest amount among sovereign nations. Hayes believes that the quickest way to achieve dollar depreciation is to “depreciate relative to gold.” The gold price on the U.S. balance sheet is $42.22 per ounce. However, the current spot price of gold is approximately $2,647. If Mnuchin can persuade Congress to change the statutory price of gold, this would lead to a depreciation of the dollar relative to gold. In this scenario, the Treasury could obtain dollar credit in the Federal Reserve’s TGA account.
Is a Bitcoin strategic reserve possible?
Recently, there has been much discussion about a Bitcoin Strategic Reserve (BSR). U.S. Senator Lummis proposed legislation that would require the Treasury to purchase 200,000 BTC annually over five years. Interestingly, if you read the bill, she suggests funding these purchases by increasing the price of gold held on the government’s balance sheet, as described above.
(Lummis Bitcoin Reserve Bill: Will establish state storage facilities and fund purchases from the Fed’s gold revaluation)
If the U.S. government creates more dollars through changes in gold value and uses some of those dollars to buy Bitcoin, its statutory price will rise. This, in turn, will stimulate other countries, which must catch up with the United States, to engage in competitive sovereign purchases. Consequently, the price of Bitcoin will gradually increase.
However, Hayes does not believe a Bitcoin strategic reserve will happen. He thinks politicians would prefer to spend newly created dollars on providing welfare to the people to secure their victory in the next upcoming elections. Nevertheless, whether or not the U.S. will implement a Bitcoin strategic reserve is irrelevant, as the mere threat of it will create buying pressure.
What is the truth of China?
China’s government has two major headaches to address: creating job opportunities for over 20% unemployed youth and preventing a decline in housing prices. To achieve this, China must implement quantitative easing (QE) and further allow the renminbi to float freely. A depreciation of the renminbi would enable Chinese manufacturers to export more goods. In the short term, this would help China gain a better negotiating position in discussions with Trump, as it would have to agree to certain demands from Trump’s team in exchange for more favorable access for Chinese producers to American consumers.
(Global major investment firms predict: Trump’s tariff sanctions will lead to a historic low in offshore renminbi depreciation)
What is the truth of Japan?
There exists a severe financial imbalance between Japan and the United States. Japan is the largest holder of U.S. Treasury bonds and has also implemented aggressive quantitative easing policies, evolving into yield curve control (YCC), which has resulted in a severely weakened yen against the dollar.
The Trump Truth suggests that the yen should strengthen against the dollar. The Bank of Japan must raise interest rates, but will this trigger a massive unwinding of yen carry trades in August?
Hayes believes that since the U.S. Navy bases in Japan help contain China’s maritime actions, and Japan’s semiconductor production ensures a friendly supply of critical components for the U.S., Trump will instruct Mnuchin to take necessary measures to ensure Japan can economically withstand the effects of a strengthening yen. One way to do this is for Mnuchin to use the Treasury’s power to provide currency swaps between the U.S. dollar and the yen to the Bank of Japan, allowing any sales of Treasury bonds and U.S. stocks to be absorbed off-market. This was deeply analyzed in Hayes’s previous articles, and Chain News has also reported on current events related to this:
(Will Japan sell large amounts of U.S. Treasury bonds? Arthur Hayes: The U.S. will initiate money printing and needs to accelerate movement towards crypto risk assets!)
What is the ultimate truth globally?
Our terminal truth is the 24/7 cryptocurrency market. Following Trump’s victory in early November, the rise of Bitcoin serves as a leading indicator of accelerated growth in the supply of fiat currency. In response to the Trump Truth, every major economic group/country must react immediately. Their response will be currency depreciation and increased financial repression.
The following chart illustrates how Bitcoin (yellow line) is leading the increase in U.S. bank credit (white line).
How does Hayes predict recent cryptocurrency trends?
Before we enter the collapse phase of the cryptocurrency bull market, Hayes believes that the crypto market will experience a painful decline around Trump’s inauguration on January 20, 2025. His family office, Maelstrom, plans to reduce some positions in advance, hoping to repurchase part of its core positions at a lower price sometime in the first half of this year.
However, very few traders can accurately seize the timing of highs and lows. If the bull market continues until January 20, Maelstrom will acknowledge failure, lick its wounds, and return to the bull market.
The Trump Truth reveals to me the structural flaws of the global order. It tells me that the best way to maximize returns is to hold Bitcoin and cryptocurrencies. Therefore, I will buy on dips.
Risk Warning
Investing in cryptocurrencies carries a high level of risk, and prices may fluctuate dramatically, potentially resulting in the loss of all principal. Please carefully assess the risks.
