Arthur Hayes on Potential Drivers of BTC Growth in 2023

Hayes initiates the discussion with an examination of Japan's financial predicament where rising inflation is compelling individuals and businesses to move from low-return bank deposits to the stock and property markets. He uses this to illustrate how capital can transition from one area to another.

He views the SEC's actions against exchanges like Coinbase and Binance as an attempt by the traditional financial system to curb capital flight from the "casino". Thus, Hayes criticizes the debt-ridden state financial system, stating that it hinges on probable opportunities, not the actual results of investment choices.

The article also delves into the anticipated devaluation of the Chinese yuan (CNY). David Dredge, a friend of Hayes and manager of the OG Volatility fund, suggests that the People's Bank of China (PBOC) will tweak its monetary policy, depreciating the CNY against the Japanese yen and the US dollar to amplify Chinese exports.

BitMEX's founder parallels the current market scenario with that of the summer of 2015. A sudden PBOC-initiated yuan devaluation then sparked Chinese investors' interest in Bitcoin, leading to a threefold price surge for the leading cryptocurrency within just a few months. 

The article also considers the influence of the affluent sectors of the US population on the crypto market. Hayes highlights that this demographic (households with annual earnings ranging from $100,000 to $200,000) significantly contributed to market expansion during the 2020-2021 crypto boom induced by the coronavirus pandemic.

Currently, with the market frightened by regulatory reprisals, Hayes expresses apprehension over whether these retail investors will remain willing to infuse their capital into crypto.

Despite these concerns, he remains optimistic that even with restricted access to the crypto market, affluent Americans will still be able to effortlessly abandon the fiat financial system and invest in digital assets.