Bitcoin (BTC) continues to make headlines in the cryptocurrency world, a bold prediction from Arthur Hayes, the co-founder of BitMEX, is capturing the attention of investors and analysts alike. In a new essay titled “Black or White?”, Hayes envisions Bitcoin surging to $1 million. This prediction is based on several key economic factors, including the potential return of former President Donald Trump, rising inflation, and Bitcoin’s unique deflationary nature.

While Bitcoin has faced minor corrections in recent weeks, the long-term outlook remains bullish. Hayes argues that economic policies and financial dynamics could push BTC to unprecedented heights, with $1 million as a plausible target. But what exactly is driving this optimistic forecast?

The Impact of Donald Trump’s Economic Policies

In his essay, Hayes delves into the future economic landscape, particularly the potential policies under a returning Donald Trump administration. One of the key points he highlights is the likelihood of continued quantitative easing (QE). QE is a strategy where central banks buy government bonds to inject cash into the economy, stimulating economic activity by lowering interest rates and encouraging borrowing.

Hayes suggests that Trump’s economic approach could involve even more aggressive QE measures, which he describes as a form of “American Capitalism with Chinese Characteristics.” He believes that such policies would lead to higher inflation, which would depreciate the U.S. dollar. With this economic backdrop, investors may increasingly turn to alternative assets like Bitcoin, which has a fixed supply and is immune to inflationary pressures.

Bitcoin’s Deflationary Nature: The Key to $1 Million

The main argument behind Hayes’ prediction is Bitcoin’s deflationary nature. Unlike fiat currencies, which can be printed at will by central banks, Bitcoin has a capped supply of 21 million coins. This scarcity, according to Hayes, makes Bitcoin an attractive store of value, particularly in an inflationary environment. As the U.S. dollar faces devaluation due to expansive monetary policies, the demand for Bitcoin as a hedge against fiat currency depreciation is expected to rise.

Hayes elaborates that as the “freely traded supply of Bitcoin dwindles,” more investors — not just from the U.S., but also from countries like China, Japan, and Western Europe — will seek Bitcoin as a safe haven. The BitMEX co-founder predicts that this global demand will propel Bitcoin’s price, leading it to a potential $1 million valuation.

“Get long, and stay long,” Hayes urges, emphasizing that Bitcoin’s value is set to increase as more fiat money chases after this scarce asset.

The Growth of Bitcoin: 400% Since 2020

Hayes points to Bitcoin’s impressive performance since 2020, when it surged by over 400%. This growth, he argues, is just the beginning. The combination of persistent inflation and Bitcoin’s fixed supply could cause its price to appreciate significantly.

The global debt issue is another critical factor in Hayes’ analysis. Currently, the U.S. debt-to-GDP ratio stands at around 132%, which Hayes argues is unsustainable. To bring the debt-to-GDP ratio down to 115%, the U.S. would need to reduce its debt by $4 trillion. Returning to pre-2008 levels of 70% would require a much more substantial $10.5 trillion reduction in debt.

This massive debt burden, according to Hayes, would force the government to continue with aggressive credit expansion — a policy that would further fuel Bitcoin’s growth. In this environment, Bitcoin stands out as a deflationary asset that could outperform fiat currencies.

Current Market State: Bitcoin’s Rally and Potential Cooldown

While Hayes’ long-term prediction is optimistic, Bitcoin has recently experienced some price fluctuations. After approaching its all-time high of $89,940, Bitcoin has retraced slightly, trading at $87,577 at the time of writing, representing a 2.63% decrease from its peak.

Despite this dip, Bitcoin’s performance over the past week remains strong, with a 17% gain. However, technical indicators suggest that the bullish momentum might be cooling off. The Relative Strength Index (RSI), which had reached 84.51 just a day earlier, has fallen to 80.85. This dip indicates that Bitcoin may be entering overbought territory, and some traders might be taking profits, leading to a short-term slowdown or minor correction.

Additionally, the Chaikin Money Flow (CMF), which measures the accumulation or distribution of an asset, has dipped to 0.31. Although it remains positive, this decline suggests reduced capital inflows, signaling a potential pause in the rally.

The Path to $1 Million

Despite the short-term corrections, the overall trend for Bitcoin remains positive. If the economic conditions Hayes anticipates — including rising inflation, expanded QE, and the devaluation of the U.S. dollar — materialize, Bitcoin could be poised for another significant rally. As more investors seek refuge from traditional currencies and economic instability, the demand for Bitcoin could push its price toward the $1 million mark.

Conclusion

Arthur Hayes’ prediction that Bitcoin could reach $1 million is rooted in the deflationary properties of the cryptocurrency, its fixed supply, and the macroeconomic factors he believes will drive demand. With inflationary pressures, aggressive monetary policies, and the growing global interest in Bitcoin as a store of value, Hayes envisions Bitcoin as an essential hedge against the devaluation of fiat currencies. While Bitcoin may face short-term volatility, the long-term outlook remains bullish, with the potential for significant price growth in the coming years.