Crypto OG Arthur Hayes has shared an insightful new outlook with his followers on the X (formerly Twitter) platform. The former BitMEX CEO is expecting to see billions of dollars flow from China into Bitcoin amid the ongoing devaluation of the yuan.
China’s Unprecedented Capital Flight
Arthur Hayes, who currently runs a crypto-focused investment fund called Maelstrom, has brought attention to possible capital exit from China, raising concerns as it worsens pressure on the beleaguered Chinese yuan (CNY).
His analysis primarily focuses on the yuan shedding almost 15% of its value against the U.S. dollar on a year-to-date basis. This has sparked speculation about whether China could mull investing billions in Bitcoin and other assets to hedge against economic turmoil.
Hayes reveals that he asked Chinese researcher Andrew Collie what the best indicator would be to estimate possible capital flight, who suggested examining the gap between China’s international net export earnings and its official foreign reserves. Data shows that while China’s foreign reserves have soared by roughly $32.407 billion this year, total net exports have increased by $553.25 billion, leaving approximately $520.85 billion that has potentially left China.
BTC To Benefit
The former BitMEX boss then hypothesizes on where this capital might be flowing to, including the possibility of China purchasing a lot of gold, paying down offshore USD debt of its banks and enterprises, or wealthy individuals shifting their wealth abroad pushed by the sputtering economy. Hayes sarcastically posits that China is definitely not acquiring more U.S. Treasuries.
He further noted the relationship between the tumbling Japanese yen (JPY) and the CNY, suggesting that the CNY must weaken so that Chinese exports remain more competitive than Japan’s.
Furthermore, Hayes predicts that the capital flight out of China may continue to rise. In conclusion, Hayes implies that some of these funds could find their way into the crypto markets, specifically Bitcoin, as he astutely opines, “I hope some finds its way to Lord Satoshi and BTC.”
The Bitcoin bull claimed last week that Bitcoin is primed to hit $70,000 even if the Fed and other central banks continued interest rate hikes to stimulate economic tightening or if they “print more money”.
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