Arthur
Hayes,
the
co-founder
of
crypto
exchange
BitMEX,
has
recently
offered
a
comprehensive
analysis
in
his
latest

essay,
“Zoom
Out,”
drawing
compelling
parallels
between
the
economic
upheavals
of
the
1930s-1970s
and
today’s
financial
landscape,
specifically
focusing
on
the
implications
for
the
Bitcoin
and
crypto
bull
run.
His
in-depth
examination
suggests
that
historical
economic
patterns,
when
properly
understood,
can
provide
a
blueprint
for
understanding
the
potential
revival
of
the
Bitcoin
and
crypto
bull
run.

Understanding
Financial
Cycles

Hayes
begins
his
analysis
by
exploring
the
major
economic
cycles
starting
from
the
Great
Depression,
through
the
mid-20th
century
economic
booms,
and
into
the
stagnant
1970s.
He
categorizes
these
transformations
into
what
he
terms
“Local”
and
“Global”
cycles,
central
to
understanding
the
broader
macroeconomic
forces
at
play.

 

Local
Cycles
are
characterized
by
intense
national
focus
where
economic
protectionism
and
financial
repression
are
prevalent.
These
cycles
often
arise
from
governmental
responses
to
severe
economic
crises
that
prioritize
national
recovery
over
global
cooperation,
typically
leading
to
inflationary
outcomes
due
to
the
devaluation
of
fiat
currencies
and
increased
government
spending.

Related
Reading

Global
Cycles,
in
contrast,
are
marked
by
periods
of
economic
liberalization,
where
global
trade
and
investment
are
encouraged,
often
leading
to
deflationary
pressures
due
to
increased
competition
and
efficiency
in
global
markets.

Hayes
carefully
examines
each
cycle’s
impact
on
asset
classes,
noting
that
during
Local
cycles,
non-fiat
assets
like
gold
have
historically
performed
well
due
to
their
nature
as
hedges
against
inflation
and
currency
devaluation.

Hayes
draws
a
direct
parallel
between
the
creation
of
Bitcoin
in
2009
and
the
economic
environment
of
the
1930s.
Just
as
the
economic
crises
of
the
early
20th
century
led
to
transformative
monetary
policies,
the
financial
crash
of
2008
and
subsequent
quantitative
easing
set
the
stage
for
the

 

introduction
of
Bitcoin.

Why
The
Bitcoin
Bull
Run
Will
Resume

Hayes
argues
that
Bitcoin’s
emergence
during
what
he
identifies
as
a
renewed
Local
cycle,
characterized
by
the
global
recession
and
significant
central
bank
interventions,
mirrors
past
periods
where
traditional
financial
systems
were
under
stress,
and
alternative
assets
like
gold
rose
to
prominence.

Expanding
on
the
analogy
between
gold
in
the
1930s
and
Bitcoin
today,
Hayes
elucidates
how

gold
served
as
a
safe
haven during
times
of
economic
uncertainty
and
rampant
inflation.
He
posits
that
Bitcoin,
with
its
decentralized
and
state-independent
nature,
is
well-suited
to
serve
a
similar
purpose
in
today’s
volatile
economic
climate.

Related
Reading

“Bitcoin
operates
outside
the
traditional
state
systems,
and
its
value
proposition
becomes
particularly
evident
in
times
of
inflation
and
financial
repression,”
Hayes
notes.
This
feature
of
Bitcoin,
he
argues,
makes
it
an
indispensable
asset
for
those
seeking
to
preserve
wealth
amidst
currency
devaluation
and
fiscal
instability.

Hayes
points
out
the
significant
surge
in
the
US
budget
deficit,
projected
to
reach
$1.915
trillion
in
fiscal
2024,
as
a
modern
indicator
that
parallels
the
fiscal
expansions
of
past
Local
cycles.
This
deficit,
significantly
higher
than
in
previous
years,
marking
the
highest
level
outside

 

the
COVID-19
era,
is
attributed
to
increased
government
spending
akin
to
historical
periods
of
government-induced
economic
stimuli.

Hayes
uses
these
fiscal
indicators
to
suggest
that
just
as
past
Local
cycles
led
to
increased
valuation
for
non-state
assets,
the
current
fiscal
and
monetary
policies
are
likely
to
enhance
the
appeal
and
value
of
Bitcoin.

“Why
am
I
confident
that
Bitcoin
will
regain
its
mojo?
Why
am
I
confident
that
we
are
in
the
midst
of
a
new
mega-local,
nation-state
first,
inflationary
cycle?”
Hayes
asks
rhetorically
in
his
essay.
He
believes
that
the
same
dynamics
that
drove
the
value
of
assets
like
gold
during
past
economic
upheavals
are
now
aligning
to
bolster
the
value
of
Bitcoin.

He
concludes,
“I
believe
fiscal
and
monetary
conditions
are
loose
and
will
continue
to
be
loose,
and
therefore,
hodl’ing
crypto
is
the
best
way
to
preserve
wealth.
I
am
confident
that
today
will
rhyme
with
the
1930s
to
1970s,
and
that
means,
given
I
can
still
freely
move
from
fiat
to
crypto,
I
should
do
so
because
debasement
through
the
expansion
and
centralisation
of
credit
allocation
through
the
banking
system
is
coming.”

At
press
time,
BTC
traded
at
$62,649.

Featured
image
from
YouTube
/
What
Bitcoin
Did,
chart
from
TradingView.com

Go to Source
Author: Jake Simmons

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