US Dollar Era Is Predicted To End Soon, Money Will Flow To Gold And Bitcoin

US dollar judged to be over soon, gold and bitcoin rose. (Kanchanara - Unsplash)

JAKARTA – The founder of the BitMEX crypto exchange Arthur Hayes appealed to a number of parties to put aside the Russia-Ukraine issue. Hayes encourages parties to be aware of the economic impact caused by economic sanctions.

Previously, global investment bank Credit Suisse predicted that the era of the dollar as the world's currency would collapse. Meanwhile digital assets and gold will replace the US dollar.

Judging by this, Hayes believes hundreds of billions of dollars will flow into gold and bitcoin in the next decade. At the same time, he also believes "100%" that the financial crisis and hyperinflation of the US dollar are imminent.

According to the official website of the BitMEX blog, it states that a freeze of more than 600 billion US dollars in Russia's foreign exchange reserves will shake the confidence of other world governments in keeping their value in the US treasury. China in particular which has the world's largest budget surplus of more than 273 billion US dollars per year will no longer use this to improve its fiat currency position.

As such, Hayes' calculations predict that China and other trade surplus countries will see gold and other commodities that can be saved to park in value around $967 billion per year, which used to belong to fiat currencies. On the other hand, it would greatly weaken the strength of the US dollar, which has been battling the highest inflation ever in 40 years.

“The transition phase will be chaotic, it will be volatile, it will change, but 100% will be HUGE inflation in fiat currencies,” said the former CEO of BitMEX.

The Federal Reserve recently ended its U.S. Treasury Bond-buying program to help curb skyrocketing prices across the country. However, as other countries move their wealth away from bonds and into commodities, the Fed will be forced to buy more US bonds to finance its debt. These purchases would be funded, of course, through the printing of money, which would turn into “hyperinflation.”

Although Bitcoin is often referred to as “digital gold” by some investors, Hayes says that it is not up to par. Bitcoin is currently trading more like a technology stock than a safe-haven asset, suggesting that the world has yet to recognize it due to the nature of hard money. Thus, governments will dump most of their money into physical gold for now, which has philosophical and historical precedent as a monetary instrument.

But that doesn't mean that digital gold isn't benefiting: Hayes remains “confident” that if this new gold era happens, some central banks will choose to start trading Bitcoin instead of sending gold around the world to pay each other.

“Again, I fully believe that on a personal level if you believe you should be spending fiat and saving gold, the mental leap to spending fiat and storing Bitcoin is very small,” he said.

The founders of the exchange concluded that gold would rise to USD 10.000, and Bitcoin to USD 1.000.000 as the fiat collapse sparked “the largest wealth transfer the world has ever seen,” as CryptoPotato and VOI summarize it.

However, Hayes' speculation regarding the soaring price of gold and bitcoin still needs further study and will take a long time to penetrate to such high prices.