Patience is a virtue. Arthur Hayes predicts that the Bitcoin market will kick off in the fall, with a chance to reach $70,000 next year.

Bitcoin, known for its price volatility, has recently shown an unusual stability and is not as responsive to market news. According to data from The Block Research, its 30-day annualized volatility is currently around 32%, lower than tech giants like Amazon and Meta. Wasn't hyperinflation supposed to happen soon? What about Bitcoin skyrocketing to a million dollars? BitMEX founder Arthur Hayes has released a lengthy article "Patience is Beautiful", analyzing the current overall economic situation, suggesting that the timing for the price surge has not arrived yet. It is expected that the price of Bitcoin will take off in the autumn, with a chance to surpass $70,000 next year.

First and foremost, Arthur Hayes' response to skeptics is—patience. Prices do not move in a straight line; they fluctuate. The fireworks and a true Bitcoin bull market will begin at the end of the third quarter and the beginning of the fourth quarter of this year. From now on, please stay calm. Take a break, enjoy nature, and spend time with friends and family. Because as autumn arrives this year, you better be strapped into your trading spaceship, ready for takeoff.

This article is excerpted and compiled from "Patience is Beautiful," and all opinions expressed are those of the author. For any doubts, please refer to the original text.

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Inflation to Restart Due to Base Effect

Due to base effects, inflation in the United States is expected to reach a temporary low point this summer and then accelerate by the end of the year. As shown in the chart below, inflation was relatively high at this time last year. Since inflation is compared on a year-over-year (YoY) basis, Arthur Hayes anticipates that inflation will restart, and the Federal Reserve will continue to raise interest rates. According to current CME Group FedWatch data, the market expects the Fed to pause the rate hikes in June, with a 68% chance of resuming the hikes in July.

Increasing Welfare and Defense Spending Leaves Federal Government Unable to Reduce Deficit

The baby boomer generation is the wealthiest and most influential group of voters in the United States and is getting older, leading to continued growth in social security and healthcare benefit costs. With the current global situation, defense spending is also expected to increase. This means that the U.S. government's fiscal deficit will continue to rise. It is estimated that an annual deficit of 1 to 2 trillion dollars will become the norm over the next decade.

U.S. Treasury Can Only Issue Short-Term Debt, Increasing Interest Burden

Due to the ongoing rate hike cycle, the phenomenon of short-term interest rates being higher than long-term rates has persisted for nearly a year. To cope with the growing deficit, the U.S. Treasury can only issue short-term bonds to cover expenses. Since long-term rates are relatively low and do not attract investors, as shown in the chart below with the concentration of U.S. debt maturing in the next few years, this also increases the Treasury's interest expense burden.

If inflation returns, short-term rates will inevitably rise again, exacerbating this issue.

Fed's Balance Sheet Reduction Insufficient to Offset Interest Expenses

According to data compiled by Arthur Hayes, although the Federal Reserve has initiated Quantitative Tightening to reduce its balance sheet, it is still not enough to offset the bond interest payments and the amounts involved in Reverse Repo and Interest on Excess Reserves transactions with banks. Moreover, with continued rate hikes and short-term rates higher than long-term rates, banks are even less willing to lend, opting to keep money in the Fed to earn stable overnight interest. This phenomenon will only worsen.

Printing Presses Activated, Bitcoin Expected to Reach $70,000

Considering the aforementioned factors, the daily liquidity injected into the system will continue to grow, with the printing presses being activated. The wealthy will invest in risky assets. Gold, Bitcoin, and artificial intelligence tech stocks are expected to benefit from the government's printing of money.

Therefore, Arthur Hayes predicts that Bitcoin will establish itself here and gradually attract funds into the global risk asset market, forming a strong support base. During a guest appearance on the "What Bitcoin Did" podcast at the end of May, Arthur Hayes also mentioned that Bitcoin has a good chance of reaching $70,000 next year, and he is starting to slowly position himself accordingly.