Arthur Hayes: Yen's Weakening Value Can Dongkrak Bitcoin Price

JAKARTA - Former CEO of BitMEX, Arthur Hayes, revealed that weakening Japanese yen could trigger an increase in bitcoin prices and other crypto assets.

According to Hayes, Japanese yen weakened rapidly against the US dollar due to the huge interest rate difference between the two currencies. This is detrimental to Japan's export competitiveness compared to China.

China may threaten to evaluate the yuan if Japan doesn't strengthen yen, as weaker yen makes Japan's exports more competitive than Chinese exports.

"To avoid a judicial devaluation that would harm US manufacturing, the US could pressure Japan to strengthen yen by asking the Federal Reserve to swap its dollar-yen currency indefinitely with the Bank of Japan," Hayes explained in his latest blog post.

The massive dollar Swap from the Fed will increase the supply of dollars globally, thus weakening the dollar but allowing China to stimulate its economy without devaluating the yuan.

Thus, the weakening of the dollar will push up the price of valued assets in dollars such as US stocks and cryptocurrencies such as BTC.

Hayes further argued that the "easy token" solution to this currency swap avoids more painful actions such as the Bank of Japan raising interest rates or the Fed openly controls the yield curve.

He also saw the pressure on yen weakening peaked ahead of the US election, which motivated policymakers to act. This kind of situation has the potential to be very beneficial for bitcoin as a hedge against increasing global liquidity.

Major cryptocurrencies have seen a spike this year, largely driven by ETF hype and demand. Bitcoin jumped to US$72,000 (Rp1,152,000,000) yesterday amid hopes that the US SEC would approve Ethereum ETFs.

However, many experts suggest that the rally would actually start after countries of global superpowers such as the US began lowering interest rates.