Good morning. Here’s what’s happening:
Price: Bitcoin and Ether are in the green as they haven’t seen near highs since the Covid-induced bull market.
Insights: For former BitMex CEO Arthur Hayes, traditional banking is broken and money will never be the same.
Bitcoin and Ether remain in the green as Asia’s trading day begins, with Bitcoin surpassing a yearly high of $30,000 and Ether beginning to test $2,000.
While Bitcoin’s association with the current banking crisis made it a clear winner last month, there are plenty of questions about how the Shanghai upgrade of the Ethereum network will affect the price of Ether.
Is it necessary to wave forward the ether? Or, is Ether just following Bitcoin’s gains?
Brian Mossoff, CEO of Ether Capital, called it a “non-event.”
“My suspicion is that it’s going to be a non-event on the price side,” Mossoff told CoinDesk TV’s “First Mover” on Monday. “I expect you’ll see more ETH get stuck in staking, either from single stakers or, again, you’ll see more structured products come to market.”
Meanwhile, the futures market is pricing in moderate gains for ether in contracts expiring at the end of June.
New inflation data is scheduled to be released on April 12, which will show that the Fed has tamed the beast and has always been bullish for crypto and risk assets.
“We will likely see continued accumulation from long-term investors interested in its currency divestment hedge features, while short-term moves are dictated by changing theories about what monetary liquidity will do,” Noel Acheson, author of crypto’s Macro Now newsletter, wrote recently.
Arthur Hayes is not talking about banking
In the coldest days of the crypto winter of 2022, when the ruins of FTX were still smoldering, VanEck predicted that Bitcoin could drop to $10K-$12K by the first quarter of 2023.
“Bitcoin will test $10,000-$12,000 in Q1 amid a wave of miner bankruptcies, marking the low point of the crypto winter,” Vanek’s head of digital asset research Matthew Siegel wrote at the time.
But Vanek was wrong about something big: Bitcoin’s price.
2023 is defined by a mini-bull market. Year-to-date, Bitcoin is up nearly 80%, currently just over $30K.
And it’s all in the face of crypto-friendly banks Silvergate and Signature collapsing.
“It’s all driven by the collapse of the Western banking system,” Arthur Hayes said in a recent interview with CoinDesk. “The world is admitting that the entire Western banking system is bankrupt, and they are all insolvent.”
Bitcoin’s correlation with traditional assets is breaking down because it acts as an asset outside the traditional fiat banking system, Hayes said, pointing to the S&P 500’s 7% gain year-to-date, versus bitcoin’s more than 80% gain.
And what does the Hayes portfolio look like in the Western banking system?
Bitcoin, gold, property and even some assets in RMB.
“I’m going to go into all these other things that are not directly connected to the banking system,” he said. “I want to own assets in Dubai and all these other areas that actually have a real economy other than printing money.”
Hayes is not a total dollar doomer – his prediction is that it will still be used by the US and its allies, but it will no longer be the world’s reserve currency. The next decade will see currency balkanization, with the dollar making up 40–50% of trade (between 1999–2019 it accounted for 74% of Asia-Pacific trade and 96% of trade in the Americas).
“The West will be a dollar bloc, and other non-aligned countries will use gold, dirhams, CNY, roubles, whatever,” he said. “When you go to different places you have to use a different currency, and everyone becomes much more of an FX speculator than they are today.”
What is the price of bitcoin?
Hayes doesn’t discount the possibility of Bitcoin hitting $1 million and is a vocal supporter of Srinivasan on Twitter. But that might not happen for a while.
“I know it’s coming, and I think Bitcoin is just going to climb. Will it reach $70,000 this year? I doubt it,” he said. “Half will be in 2024, and more banks that have failed in the US and Europe. You’ll probably also get a very clear guarantee of all deposits in the Western world by central banks.”
At this point, Hayes argues, the market will know whether it needs to be in bitcoin, gold, ether or other assets.
“Anything that isn’t stocks and government bonds,” he says.
How can you not be bullish on crypto?
Ethereum developers have begun referring to the upcoming hard fork of the blockchain — in this case, a key upgrade — as “Shapela.” Ether Capital CEO Brian Mossoff joined the conversation ahead of two major Ethereum network upgrades that could happen simultaneously on April 12. Also, TRM Labs Head of Legal and Government Affairs Ari Redbord discussed the Treasury Department’s first analysis of illicit financial risks related to DFI.