Bitcoin is the cure for Global Yield Curve Control: Arthur Hayes

BitMEX co-founder Arthur Hayes recently called Bitcoin “the cure” for yield curve control (YCC) — the process by which governments use quantitative easing to suppress rising bond yields.

The former CEO predicted that YCC will soon spread to central banks worldwide, suggesting that the leading cryptocurrency will become attractive in the process.

Bitcoin and the Bank of England

Hayes’ comments were in response to the Bank of England’s (BOE) latest decision to carry out temporary purchases of long-dated UK government bonds, starting on 28 September.

The BOE was forced to take action after 10-year yields broke out on Tuesday to 14-year highs above 4.5% – up from about 3.5% on Friday. according to Financial Timesthis was triggered by a liquidation cascade of interest rate derivatives which caused pension schemes to dump their long-term government debt.

The YCC brings more money into the economy, potentially marking the UK’s partial departure from a global trend towards hawkish monetary policy. According to Hayes, other countries will soon follow suit.

“A virus starts in one host and quickly moves on to the next,” he tweeted on Wednesday. “All central bankers think and act alike. If it happens in the UK, your banana republic is next.”

The co-founder added that Bitcoin is “Lord Satoshi’s cure” to the problem.

Hayes argued in March that fiat currencies – particularly the US dollar – will hyperinflate over the next decade, causing the world to flee to gold and Bitcoin as safe havens. Both commodities have often been compared to each other as inflation hedges, due to their scarcity.

In July he did too proposed that the Federal Reserve could start “printing money” again if other currencies continued to weaken against the dollar, which would be bullish for Bitcoin.

The British pound has weakened rapidly against the dollar this week, now approaching dollar parity. In the aftermath, trading volume for the BTC/GBP trading pair has step up.

What will other central banks do?

Fed Chairman Jerome Powell has given no indication that he plans to reverse course tightening of interest rates. His public comments consistently reflect a desire to curb record high inflation in the United States.

Still, some believe this strategy cannot last. Sen. Elizabeth Warren criticized Powell’s plan in August, saying she is “very concerned that the Fed is going to tip this economy into recession.” In fact, the US already confirmed a technical recession in July after marking two consecutive quarters of negative GDP growth.