7 months ago
20 ARTICLE AD
While certain traders take pride in their recent successes, the real crypto legends are those who adopted the “Left Curve” mindset during the bear market spanning from 2021 to 2023.
Arthur Hayes, an experienced crypto trader and co-founder of Bitmex, recently shared some insight about the main factors behind the current bull run. He explained how sovereign debt, currency debasement, and the growing attraction towards cryptocurrencies as a protection against the decline in fiat currency all interact with each other.
Hayes acknowledgув that while certain traders may take pride in their recent successes, such as capitalizing on Solana’s rapid surge, the real crypto legends are those who adopted the “Left Curve” mindset during the bear market spanning from 2021 to 2023. This approach involves buying and holding cryptocurrencies, especially Bitcoin, as the bull market gathers strength
Currency Debasement and Institutional Investment: Catalysts for Crypto Surge
Hayes further delved into the fact that major economic powerhouses such as the United States, China, the European Union, and Japan are deliberately lowering the value of their currencies to handle their government debts. He also noted that traditional financial institutions (TradFi) are now able to profit from this situation through Bitcoin Exchange-Traded Funds (ETFs).
As a result, these institutions are urging their clients to safeguard the value of their wealth against currency devaluation. This increase in institutional investment further boosts the cryptocurrency surge, confirming the belief that crypto is a practical way to protect against the depreciation of fiat currency.
Understanding Nominal GDP and Its Impact on Economic Policies
Hayes explains the concept of nominal Gross Domestic Product (GDP), which includes inflation and real growth. He argues that governments borrow money to fund projects, hoping to boost economic growth and attract investors with promising yields. However, politicians often manipulate the system by keeping government bond yields lower than GDP growth rates. This allows them to spend more without raising taxes, but it leads to bad investments and economic stagnation. As a result, bond yields become distorted, and central banks print more money to reduce the government’s debt.
More so, he revealed that when real yields turn negative, traditional government bonds become unattractive investments. Investors are then compelled to seek alternative assets capable of outpacing inflation, such as cryptocurrencies like Bitcoin, which possess a finite supply and are immune to the debasement afflicting fiat currencies.
The Bitmex co-founder further contends that the polarized political landscape in the United States, particularly leading up to the 2024 presidential election, will only worsen this trend. With both major parties vying for power and promising extensive spending programs, the incentive to maintain negative real yields and facilitate unchecked borrowing will intensify.
Don’t Leave the Left Curve
As the summer months approach, the crypto trader advises his colleagues to seize the opportunity presented by recent market dips and token launches to accumulate positions strategically. In his post, he stated:
“This is the perfect time to take advantage of the recent crypto dip to slowly add to positions…..Whatever the flavour of crypto risk excites you, the next few months will present a golden opportunity to add to positions.”
He remains steadfast in his conviction that the overarching macro narrative of currency devaluation and relentless money printing will continue to fuel the crypto bull market, rewarding those who embrace the “Left Curve” mentality and hold their ground.
