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Former BitMEX CEO Arthur Hayes advocates for the U.S. to adopt a Bitcoin reserve strategy by devaluing gold, suggesting it could catalyze economic revival.
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His controversial stance indicates that a gold devaluation could empower the U.S. Treasury to generate dollars more rapidly, facilitating significant Bitcoin purchases.
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Hayes underscored the urgency of this action, stating, “Trump has one year to make impactful economic changes,” emphasizing the need for immediate policy shifts.
Arthur Hayes proposes a radical economic strategy involving gold devaluation to establish a Bitcoin reserve, urging the Trump administration to act swiftly.
Hayes Urges a Transition from Gold to Bitcoin Reserves
In a recent analysis published on his Substack, Arthur Hayes presents a provocative argument suggesting that moving away from the gold standard could unlock significant financial gains for the United States. By devaluing gold, Hayes argues, the U.S. Treasury could essentially generate additional dollar credits, which could then be strategically utilized to invest in Bitcoin.
Hayes highlights the current undervaluation of gold at approximately $42.22 per ounce as an obstacle. He proposes a dramatic revaluation to between $10,000 to $20,000 per ounce, asserting that such a devaluation would significantly increase the Federal Reserve’s Treasury General Account (TGA), enabling a swift infusion of capital into the economy.
“By swiftly weakening the dollar, the administration can achieve economic goals without prolonged negotiations. With Trump’s window to secure his legacy closing, a gold devaluation could be initiated in early 2025,” Hayes elaborated.
The Implications of a Bitcoin Reserve for the U.S. Economy
According to Hayes, establishing a Bitcoin reserve could catalyze not only the adoption of Bitcoin but would also affirm the U.S.’s dominance in the digital asset realm. The strategy aims to boost Bitcoin’s value while positioning the U.S. as a leader in cryptocurrency adoption.
The Price of Bitcoin vs. Gold Over Time. Source: Visual Capitalist
Hayes posits that with Bitcoin considered by many as a form of hard money, the central bank that holds the largest Bitcoin reserves would naturally shape policies favoring cryptocurrencies.
“The intentional purchase of Bitcoin using devalued dollars would lead to an escalated price of Bitcoin,” Hayes noted. “Other nations would have to respond by accumulating their own Bitcoin to remain competitive, creating a growing demand for this digital asset.”
Interestingly, the conversation around national Bitcoin reserves is not isolated to the U.S.. Reports reveal increasing interest in similar strategies from lawmakers in Russia, Japan, and even local councils in Canada.
Evaluating the Timeline for Action
Hayes expressed caution regarding the timeline for the Trump administration to implement these drastic changes, warning of potential disappointment among investors. He emphasized that the administration would need at least a year to address various challenges, yet prompt action would be vital to ease investors’ apprehensions.
“The realization that such swift changes are necessary could trigger market instability and significant sell-offs if expectations remain unmet,” Hayes predicts.
Given the prevalent urgency among the populace for economic revitalization, Hayes advises that rapid and decisive actions are fundamental for the administration. “Bold moves, like initiating a gold devaluation early in the administration, will not only stimulate economic growth but could shift global financial dynamics rapidly,” he concludes.
Hayes’ perspective resonates with some legislative figures, including Republican Senator Cynthia Lummis, who previously suggested significant investments in Bitcoin by liquidating a portion of federal gold reserves, highlighting the increasing momentum toward a cryptocurrency-focused financial strategy.
Conclusion
As the possibility of transitioning from gold to Bitcoin reserves gains traction, Hayes’ insights reflect a timely and strategic approach aimed at rejuvenating the U.S. economy amidst rising global competition. The urgency of implementing these policies cannot be overstated, as doing so could redefine the future landscape of digital assets and the financial hierarchy on a global scale.
