How a falling Yen could fuel a crypto market boom, per Arthur Hayes

• A weakening Japanese Yen could fuel currency wars.
• A US intervention could lead to liquidity injection, fueling the crypto market rally. 

BitMEX exchange founder and Maelstrom crypto fund CIO Arthur Hayes stated that the weakening Japanese Yen (JPY) could induce liquidity and boost Bitcoin [BTC] and the rest of the crypto market. 

On his latest blog titled ‘Easy Button,’ the exec noted that, 

“I think that a USDJPY surge towards 200 is enough to put on the Chemical Brothers and “Push the Button.”

‘Chemical Brothers’ refers to the US and Japan, while ‘Push the Button’ means printing money or ‘injection of liquidity.’ 

At the time of writing, USDJPY traded at $156. The USD has strengthened against the Yen in 2024, with a YTD (year-to-date) performance of 10%.

From the Yen’s perspective, the Japanese currency has depreciated massively in the past few months. 

How a depreciating Yen could boost crypto

According to Hayes, the plummeting Yen’s value could induce currency wars between Japan and China, forcing the US to intervene. 

For perspective, a dropping Yen means it will be cheaper for Japan to export more goods in bulk to the rest of the world. Such a move would make its exports very competitive compared to China’s. 

In retaliation, China could devalue its yuan (CNY) by printing more money to maintain its export advantage and stabilize the CNYUSD to the desired level.

According to Hayes, the US could intervene and strengthen the Yen by devaluing the USD by increasing its supply. 

‘To weaken the dollar, its supply must increase. Imagine the Japanese needed $1 trillion worth of firepower to strengthen the yen from 156 to 100 overnight.’

The ripple effect is a surge in the price of dollar-based assets due to increased supply in USD. Collectively, with an uptick in Yuan (CNY), a ‘crypto boom’ could be likely. 

‘Crypto booms, as there is more dollar and yuan liquidity floating in the system’

Additionally, per Hayes, the above currency devaluation will be ripe for Bitcoin’s upswing because it is the ‘best-performing asset in the face of global fiat debasement.’

That said, this isn’t the first time the executive has predicted favorable macro conditions for crypto to rally.

Hayes previously asserted that the US elections could increase US liquidity, which could drive risk-on assets, including BTC.