Bitcoin rises to $89,000, taking traders by surprise. Many have started speculation about its achieving a milestone of $100,000. Just a few months ago, such a price did sound like a fairy tale, but after this month’s more than +70% increase from Aug. 5th, the market has shifted dramatically.
Arthur Hayes, in his most recent article, indicates that former US President Donald Trump’s economic policies may devalue the US dollar, thus driving the Bitcoin price up to $1 million.
Hayes points out that Trump may use economic strategies similar to those of China, which will increase the money supply and bring about growth. A weak economy, consequently, will drive Bitcoin and other assets away from the US dollar and increase their popularity.
Hayes compares Trump’s tactful policy relation to the one of China regarding economic liberalization. He quotes Deng Xiaoping’s most famous statement:
It doesn’t matter if a cat is black or white, so long as it catches mice.
He thinks that Trump can apply the same strategy of being adaptable to U.S. capitalism which might involve a blend of concepts from different economic models to keep the majority and hence power.
The U.S. has long moved away from pure free-market capitalism. This started with the Federal Reserve in 1913. Policies like the New Deal and corporate tax cuts also moved further away from the free market.
Bitcoin and the shift in U.S. economic strategy
In recent years, Trump and Biden have used stimulus checks to help the economy. These measures had mixed results. They sparked growth but also led to high inflation. This caused the Federal Reserve to raise interest rates.
These policies ended up benefiting the wealthy the most. Additionally, Hayes says that Scott Bassett, who Trump may make Treasury Secretary, could push for things like tax credits and subsidies. This would aim to boost American jobs and industries.
These moves could help the government and U.S. companies. But they could hurt long-term bondholders and savers. In this case, Bitcoin, gold, and stocks might protect against inflation and market instability.
Related | FTX bankruptcy estate targets Binance in $1.8B lawsuit
