Arthur Hayes: Yen depreciation to 200 will accelerate Bitcoin's upward momentum, BTC could hit one million US dollars

In early May, BitMEX co-founder Arthur Hayes, who accurately predicted a Bitcoin rebound, has once again issued a lengthy article, warning everyone to closely monitor the USD/JPY trend. If the Japanese Yen plummets to the 200 level, it will trigger a gamble among the US, China, and Japan, ultimately leading to significant devaluation of fiat currencies and causing Bitcoin to rise to $1 million.

Continuous Depreciation of the Japanese Yen Puts Pressure on China

If the Bank of Japan does not raise interest rates and the Federal Reserve does not lower them, the interest rate differential between the US dollar and the Japanese yen will continue to exist. Due to the higher US dollar yield compared to the Japanese yen, investors will continue to sell the Japanese yen, causing the yen to depreciate continuously.

China and Japan are direct export competitors. If the Chinese yuan strengthens against the Japanese yen, that is, the yen weakens, and the Chinese yuan appreciates, as shown in the chart below, China's export competitiveness will be compromised. Currently, China is hoping to break free from currency tightening by focusing on expanding its manufacturing industry and exporting more goods.

Therefore, if the Japanese yen continues to weaken, China may respond by devaluing the Chinese yuan.

The Game between China, the US, and Japan

However, the Biden administration in the US may not be able to tolerate the devaluation of the Chinese yuan before the election, as this would lead to a continued loss of job opportunities in the US, resulting in a defeat for him in the election.

Hayes believes that China will leverage this fear of election failure to its advantage. China may negotiate with the US, demanding an increase in the global supply of US dollars to implement a policy of a weaker US dollar. This would cause the prices of any assets based on the US dollar to rise. This would benefit the US stock market and eventually the US government, as it would generate profits subject to capital gains tax. The appreciation of the Japanese yen could also reduce Japan's import energy costs and domestic inflation.

The Key Level of 200 for the USD/JPY Exchange Rate

Hayes believes that the pace of the Japanese yen depreciation will accelerate in the fall. This will force the US, Japan, and China to take action. The US election will be a significant driver for the Biden administration to come up with solutions. He also considers 200 to be a crucial price level.

Bitcoin Could Reach One Million US Dollars

According to Hayes' theory, in the face of the depreciation of global fiat currencies, Bitcoin will be the best-performing asset. When measures are taken to address the weakness of the Japanese yen, he predicts that funds flowing into the Bitcoin complex will drive the price up to $1 million, or even higher.