Arthur Hayes Predicts Bitcoin Prices Will Rise High Due to China's Policies

Bittime - Arthur Hayes, founder of crypto exchange platform BitMEX, expressed his prediction that the planned interest rate cut by the Central Bank of China (PBOC) will trigger a surge in Bitcoin prices in the near future. According to him, this looser monetary policy, referred to as an interest rate “bazooka”, will trigger a major rally for Bitcoin and other crypto assets in 2025.

China's Monetary Policy Encourages Crypto Assets

At the end of December 2024, the PBOC held a meeting indicating that they would focus more on low interest rate policies. This suggests that China's central bank will soon cut their benchmark interest rate which is currently at 1.5%, the lowest figure in their history. This step is in line with the monetary policies taken by many global central banks which are trying to stimulate the economy with lower interest rates.

Read also: Investors Target Bitcoin for Long-Term Investment, Here's Why!

The PBOC also announced that it plans to lower banks' required reserve ratios and interest rates further. This is predicted to increase liquidity and encourage credit demand, which could ultimately have a positive impact on global financial asset markets, including the crypto market.

Impact of China's Policies on Bitcoin Prices

The reduction in interest rates by the PBOC will have an impact on China's domestic money market and credit market. However, greater effects are expected to be felt in international markets, including in the crypto world. The reason is, with low interest rates and looser monetary policies, Bitcoin will increasingly be seen as a safe investment instrument, considering that many investors want to protect their wealth from a decline in the value of fiat currencies.

Read also: Bitcoin Price History: How Much Was BTC Priced When It Was First Launched?

"If the Chinese Central Bank issues a monetary bazooka policy, this will push the price of Bitcoin and other crypto assets up sharply in 2025," said Arthur Hayes. According to him, looser market conditions will create opportunities for Bitcoin to continue the price increase that has proven profitable for investors.

Market Reaction to US and China Low Interest Rate Policies

Hayes' prediction is based on previous events that show the major impact of monetary policy on the price of Bitcoin. For example, after the announcement of an interest rate cut by the Federal Reserve in September 2024, the price of Bitcoin immediately soared past the $60,000 mark, even reaching a record high of $100,000 in a short time.

Hayes sees similar policies from China's Central Bank reinforcing this trend. "This policy will encourage greater institutional investor interest in entering the Bitcoin market," he added.

Bitcoin and ETFs: Growth Catalysts in 2025

In addition to his predictions about the Bitcoin price rally, Hayes also mentioned that the growth in cash flows into Bitcoin via Exchange-Traded Funds (ETFs) will be an important factor supporting Bitcoin demand. As interest from institutional investors increases, Bitcoin ETFs are expected to grow in popularity and become the primary way for many large investors to participate in the crypto market.

"If my theory proves correct, buying a Bitcoin ETF will be a very easy decision for institutional investors in the US. Bitcoin is the most profitable asset amidst weakening fiat currencies, and investors know that," explained Hayes.

Potential Benefits and Risks to Be Aware of

With predictions of a surge in Bitcoin prices driven by looser monetary policies from China and the United States, many investors are starting to look again at crypto as an investment instrument. However, analysts warn that crypto market volatility remains high, so investors must be careful.

Overall, although Bitcoin's growth prospects in 2025 appear very promising, vigilance and a careful investment strategy are still needed to mitigate the risks involved. As an asset that is susceptible to price fluctuations, Bitcoin can present both opportunities and challenges for investors who want to utilize it as a long-term asset.

FAQ Arthur Hayes Predictions on Bitcoin Price

What triggers Bitcoin price predictions to rise?

Arthur Hayes predicts Bitcoin prices will rise due to the low interest rate policies of the Chinese and US Central Banks.

Why does China's policy affect Bitcoin?

A drop in Chinese interest rates could increase liquidity, making Bitcoin more attractive as a safe asset.

Will Bitcoin prices continue to rise?

Despite upside potential, high volatility means investing in Bitcoin remains risky.

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Reference

Crypto Potato, Arthur Hayes: China Interest Rate ‘Bazooka’ Will Goose Bitcoin Prices, accessed  6 January 2025.

Author: MF