- A weakening Japanese yen could fuel currency wars.
- A US intervention could lead to a liquidity injection, fueling the crypto market rally.
Founder of the BitMEX exchange and CIO of the Maelstrom crypto fund, Arthur Hayes, stated that the weakening Japanese Yen (JPY) could increase liquidity and boost the currency. Bitcoin [BTC] and the rest of the crypto market.
On his latest blog entitled ‘Easy button,’ the ex noted That,
“I think a rise in the USDJPY towards 200 is enough to attract the Chemical Brothers and shout ‘Push the Button’.
‘Chemical Brothers’ refers to the US and Japan, while ‘Push the Button’ means printing money or ‘liquidity injection’.
At the time of writing, USDJPY was trading at $156. The USD has strengthened against the yen in 2024, with a YTD (year-to-date) performance of 10%.
From the perspective of the Yen, the Japanese currency has depreciated enormously in recent months.
How a depreciating yen could boost crypto
According to Hayes, the plunging value of the yen could lead to currency wars between Japan and China, forcing the US to intervene.
From a perspective, a falling yen means it will be cheaper for Japan to export more goods in bulk to the rest of the world. Such a move would make exports highly competitive compared to China.
In retaliation, China could devalue its yuan (CNY) by printing more money to maintain its export advantage and stabilize the CNYUSD at the desired level.
According to Hayes, the US could step in and strengthen the yen by devaluing the USD by increasing its supply.
‘To weaken the dollar, its supply must increase. Imagine if the Japanese needed $1 trillion in firepower to strengthen the yen from 156 to 100 overnight.”
The ripple effect is an increase in the price of dollar-based assets due to increased USD supply. Collectively, with a rise in the yuan (CNY), a “crypto boom” could be likely.
‘Crypto is booming because there is more dollar and yuan liquidity floating in the system’
Furthermore, according to Hayes, the aforementioned currency devaluation will be ripe for Bitcoin’s revival as it is the “best performing asset in the face of global fiat debasement.”
That said, this isn’t the first time the executive branch has predicted favorable macro conditions for crypto ascent.
Hayes earlier claimed that the US election could increase US liquidity, which could increase risks to assets including BTC.