BitMEX CEO, Arthur Hayes believes bitcoin will soon reach $20k fuelled by Federal Reserve’s decision to cut interest rates. The Fed is expected to announce its latest policy decision on September 18 at 2.00 pm ET. Many analysts in the crypto community believe dovish policies put forward by Central banks are bullish for bitcoin. Arthur Hayes is one of them and he is not shying away from adding a $20k price target for the king crypto.
Meanwhile, the US Federal Reserve injected billions of dollars into the financial system on Tuesday– the first such intervention in more than a decade. The Fed carried out a repo operation where it added $53.15 billion into the United States financial system. On Wednesday, the Fed is planning to inject another $75 billion through similar repo transactions.
Get Ready For Bitcoin To Surge To $20,000 – Arthur Hayes
Rate cuts particularly reduce the cost of fiat currencies by increasing their overall supply in the market. This inflationary measure drives investors to safe-haven assets like bitcoin, which is viewed as a hedge against economic turmoil. Many say Bitcoin is an antithesis to traditional finance because it can easily be transferred around the globe, unlike gold.
Arthur predicted that the looming rate cuts by the Federal Reserve would reduce the yield on the US dollar and push the price of bitcoin to $20,000.
“QE4eva is coming. Once the Fed gets religion again, get ready for #bitcoin $20, 000,” he noted.
Notably, the United States is not alone. As ZyCrypto reported, the European Central Bank announced that it had cut the deposit rates by a tenth of a percentage to a jaw-dropping -0.5% in a bid to revive the flagging economy. In addition, the ECB will restart its quantitative easing scheme from November where it will be buying bonds worth 20 billion euros every month.
Fed Rates Cut A Boon For Bitcoin?
In late July, the US Federal Reserve cut rates for the first time in more than 10 years – since 2008 great financial crisis. Following this decision, bitcoin surged by more than $200 to trade back above $10k within a few hours.
The Federal Reserve is set to cut rates again today, less than 9 months away from bitcoin’s reward halving – an algorithmically-set event where the present block reward of 12.5 bitcoin will be halved to 6.25 bitcoin, therefore inducing scarcity. Put simply, the Fed will increase liquidity in the US economy while bitcoin becomes a scarce commodity, and as we all know, scarcity creates value.
Other than Arthur Hayes, other observers also believe a rate cut will spur significant growth and ignite the next bitcoin bull run. A few days ago, the founder and CIO of Ikigai asset management firm, Travis Kling pointed out in an interview with CNN that as governments and central banks everywhere opt for dovish policies, bitcoin will undeniably emerge as the best hedge. Kling added that bitcoin is scarcer than gold – owing to its hard capped supply- subsequently making it the “hardest money in human history”. He explained:
“Now is an incredibly interesting time from a global macro perspective and it appears that crypto has been created for such a time as this. With what we have in terms of monetary and fiscal policies from central banks and governments, big tech overreach, government overreach, data privacy issues that are coming to the center of the collective consciousness.”
BitMEX CEO seems convinced his $20, 000 bitcoin price prediction will materialize spawned by the imminent fed rate cuts. Apart from Hayes, and Kling, Morgan Creek’s co-founder Anthony Pompliano is also of the same opinion. The crypto pundit has in the past stated that quantitative easing (QE) is “rocket fuel for bitcoin”.