Stimulus Binge May Push Bitcoin to $20,000 in 2020, BitMEX CEO Says

Stimulus Binge May Push Bitcoin to $20,000 in 2020, BitMEX CEO Says

Published: April 13th, 2020

 Arthur Hayes, the co-founder, and CEO of BitMEX is a controversial man. He last week stirred his pot by predicting that the stimulus glut that the global economy has witnessed in the past two months may push Bitcoin to a new high in 2020. The entrepreneur, however, warns that cryptocurrency enthusiasts should prepare for a massive drop in price before the steep surge.

The co-founder and CEO of BitMEX Arthur Hayes has predicted that Bitcoin will exchange at $20,000 by the end of 2020. The outspoken entrepreneur has, however, warned crypto enthusiasts to prepare for an acute decline.

In the latest episode of Hayes’ monthly commentary, Crypto Trader Digest in an article titled “Choose Your Fiction,” he affirms that the U.S. government can deter the initial fallout from the coronavirus pandemic by printing enough money.

The prediction is, however, not lacking gloom. Hayes says that partly because of the declining demand for foreign goods and the acute hoarding of cash that American banks are currently involved in, the U.S. dollar may never get to the nations and businesses that need it most. This situation, Hayes says, will initiate a widespread fallout that will eventually send the global economy crumbling.

No Accurate Timings

Saying that he has no accurate timing of the fallout period, Hayes stated that the Federal Reserve can print as much money as it wants. He adds, however, that the intended target may not get their hands on this money. The resulting situation, Hayes thinks, will break the strong dollar on the backdrop of a degenerating global economy, leading to a restructuring.

Hayes believes that Bitcoin stands to gain from all this, especially if Uncle Sam insists on digitizing the dollar. The controversial entrepreneur believes that Bitcoin is the strongest form of digital cash. And, where all manner of trust in fiat currency has disappeared, solving the demand and supply chain that have since been demolished calls for governments to provide fiscal stimulus packages in the tune never witnessed before.

The BitMEX CEO says that since these loans will not be compensated by tax receipts, especially since more than 30% of the population has lost gainful employment, the printing press is the only other option.

Hayes’ assertion makes sense since handing cash directly to the populace demands that governments digitize the said cash. Doing so will educate a larger portion of the population about digital currency. And since many people will not want to experience the ravaging effects of inflation associated with the injection of substantial amounts of money into the economy, they are bound to go for the hardest version possible of digital money, which in this case is Bitcoin.

Shared Sentiments

The cryptocurrency entrepreneur is not the only analyst thinking along these lines. Before the March 12 decline that saw Bitcoin drop to $3,600, another crypto trader who goes by the pseudonym “Crypto Capo” had predicted that the Bitcoin price would fall to $3,000s region in early 2020.

Bitcoin to Plunge Alongside U.S. Equities

In the near term, Hayes believes that the U.S. stock market will see a strong rebound facilitated by the $2 trillion stimulus package that the Senate recently put together. The package is the U.S. U.S. government response to the current situation. The administration is keen to avert another 2008-like market crash and the package seems to be working this far since it has increased the uptake of stocks recently.

Hayes is basing his predictions on the models that suggest that the American stock market often experiences major sidesteps during economic turmoil. Given the current situation where America and Europe are experiencing little progress in getting rid of the coronavirus pandemic, the global manufacturing sector has ground to a halt.

The situation created by the health crisis has initiated a free-fall of the major European economies, which makes Bitcoin, stocks and other high-risk assets vulnerable and subject to substantial corrections.

The Rationale

The figure $20,000 seems like a number picked out of a hat. Because nowhere in the entire blog does Hayes provide a mathematical model that explains how Bitcoin will end at $20,000 or more. However, his reasoning is lucid to support a strong Bitcoin by the end of the year.

Typically, many countries are already in a state of panic due to this pandemic. In the U.S. and Europe where the surge goes on unabated, the panic levels are already at a fever pitch. Of the almost 2 million confirmed cases, the U.S. leads with over 560,000 cases and over 22,000 deaths.

These grim figures are inflicting great damage to the economic and social infrastructures of the various countries. And, with the top physicians predicting that it may take between a year and 18 months to roll out a vaccine, many more countries are heading into panic mode.

Hayes says that things will start looking up when the world, and most especially the U.S. and Europe record some progress in developing an effective treatment. He adds that such a development will push the markets towards stocks but the appetite will improve for Bitcoin as well, and even the other cryptocurrencies.

By the end of 2020, Hayes predicts that the price of Bitcoin will be $20,000. Other proponents backing this school of thought, however, are associating it with the coming Bitcoin Halving and not the post-COVID-19 dynamics.

Bitcoin tends to rise about 10 to 11 months after every halving. If the coin confirms this pattern in this coming reward halving, then Bitcoin may gain some time in 2021.

In Summary

The current economic turmoil caused by the coronavirus pandemic has affected every sector of the global economy. The harsh effects will reverberate for a considerable period. Many governments the world over, have injected trillions of dollars into their economies to help contain the effects. As these funds come in, hopefully, the stock markets will revive and the appetite created will spill over to other risk assets. It is this reasoning that Arthur Hayes, the CEO of BitMEX is riding on to predict that Bitcoin will hit $20,000 by the end of 2020. Of course, this can only apply if the disease is contained before the year ends. The best approach now, as such, is to wait and see.

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