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What’s driving the Bitcoin rally? Arthur Hayes says it’s not just BlackRock ETF euphoria

What’s driving the Bitcoin rally? Arthur Hayes says it’s not just BlackRock ETF euphoria
BitMEX co-founder Arthur Hayes believes the war in Israel will see Bitcoin surge. Credit: Andrés Núñez/DL News.
  • Bitcoin’s rally to $35,000 is due to “fears of global wartime inflation,” says BitMEX co-founder Arthur Hayes.
  • Hayes says a crypto bull market will be in “full swing” once investors assess the war’s impact on the economy.

Happy Thursday!

Bitcoin and gold are becoming safe havens for investors worried about the impact of warfare on the US economy, the co-founder of the BitMEX cryptocurrency exchange Arthur Hayes wrote in a blog post on Wednesday.

Let’s dive into it.

An ‘inflationary global war situation’

Bitcoin’s rally to $35,000 this week is driven by investors who envision a future where the US will up its spending to support its allies, said Hayes.

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While investor optimism about impending approval of BlackRock’s Bitcoin spot exchange traded fund helped lift Bitcoin above $30,000, this week’s surge has more to do with the war in Israel, Hayes said.

“This isn’t speculation as to an ETF being approved — this is Bitcoin discounting a future, very inflationary global world war situation,” Hayes said.

Bitcoin rallied “directly” after President Biden made the case that the US should provide wartime aid to both Israel and Ukraine, Hayes wrote.

“This is the trigger, and it’s time to start rotating out of short-term US Treasury bills and into crypto,” he said.

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While Bitcoin’s price surged, long-end US Treasuries suffered an aggressive selloff, wrote Hayes, a sign that investors are expecting the government to borrow “trillions” of dollars to support the war effort.

“You don’t want to own bonds of a nation fighting two forever wars,” wrote Hayes.

Hayes said gold’s price performance over the last few weeks was another clue that investors were seeking apolitical safe havens.

Gold is up 9.3% since the beginning of the Israeli-Palestinian conflict, according to TradingView.

“If long-term US Treasury bonds offer no safety for investors, then their money will seek out alternatives,” Hayes wrote. “Gold, and most importantly, Bitcoin, will begin rising on true fears of global war-time inflation.”Hayes said he expected a crypto bull market to reach “full swing” once wartime spending becomes too stressful on the US economy.

BlackRock CEO Larry Fink told Fox Business on October 16 that Bitcoin’s gains are indicative of a “flight to quality” because of macro uncertainty provoked by the Israeli-Palestinian conflict.

“We’re hearing from clients around the world about the need for crypto,” said Fink.

Crypto market movers

  • Bitcoin nudged upwards by 0.4% in the last 24 hours and is trading for $34,300.
  • Ethereum is up 2.5% in that same period of time, changing hands for $1,830.
  • Avalanche and Shiba Inu rose by 8.1% and 6.8% respectively.

What we’re reading

Tom Carreras is a Markets Correspondent at DL News. Got a tip? Reach out at tcarreras@dlnews.com