Bitcoin’s ‘KISS Of Death’? Arthur Hayes Warns Of Recession
Former Bitmex CEO Arthur Hayes outlines Donald Trump’s re-presidency in his latest blog post, Kiss of Death, a provocative paper on Bitcoin and the wider financial market trajectory. Hayes has long viewed on cryptocurrencies, and he believes that the convergence of fiscal and monetary policy could bring the price of Bitcoin up to $1 million in the Trump 2.0 era, but only after a period of recession-driven turmoil.
Decompose Bitcoin’s “Kiss of Death”
Hayes’s frame A “kiss” surrounding the principle of “kiss” (keep it simple and stupid) has made market participants focus on the core driver of asset prices: liquidity. He believes that rather than overreacting to sensational headlines, people should pay attention to the shift in the amount and price of the currency (i.e. how much credit is created and at what interest rates).
“One day, you buy and sell quickly after digesting the next title,” Hayes warned. “The market has made your achievements in the process and your stack will soon decrease.” He advises sticking to the simpler outlook: If the U.S. government prints a lot of money at lower interest rates, risky assets like Bitcoin will surge.
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A major premise of Hayes’ analysis is that President Trump is a background “real estate performer” who will debt debt for his “America First” agenda rather than accepting austerity. Hayes, who contrasted with Andrew Mellon, Treasury Secretary under Herbert Hoover, once announced: “Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate. It will clear the rot in the system.”
Hayes believes that this position will be a political suicide because the president tries to be seen as Franklin Roosevelt of the 21st century, not Hoover. As Hayes put it, “Trump wants to be regarded as the greatest president of all time” and therefore tends to relax credit terms rather than tighten them.
Hayes highlighted Trump’s unconventional moves to cut federal spending and potentially trigger a recession, forcing the Fed to respond to cut tax rates and new liquidity. New formation Ministry of Government Efficiency (DOGE)Leaded by high-profile entrepreneur Elon Musk, it is portrayed as an active effort to expose fraud and reduce waste in government plans.
Hayes cited the moral (Doge) claim that Social Security payments could go out to deceased individuals or unverified identities, which are said to cost hundreds of billions (or even trillions) of dollars a year. Hayes pointed out: “Trump and moral people are firing hundreds of thousands of government employees.” Media reports said media reports said unemployment statements in Washington, D.C. were raised.
By cutting the federal budget so huge and rapid, Trump could, in Hayes’ words, “cause a recession or convince the market, and people are just around the corner.”
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Once there are signs of recession, Hayes predicts that Fed Chairman Jerome Powell has no choice but to lower interest rates, ending Quantitative tightening (QT)and it is possible to restart quantitative easing (QE) to avoid a widespread financial crisis. Powell is Hayes a “turning traitor” (referring to the Fed’s tax cuts cut during Kamala Harris’ campaign), but remains bound by the Fed’s mission to keep economic stability.
Hayes pointed out that the $2.08 trillion in U.S. corporate debt and the $100 trillion in U.S. Treasury Department’s debt must be rolled up in 2025. If the economy slows down, paying this debt at high interest rates is not feasible. In this case, the only redemption for the Fed is to create new currencies and lower interest rates.
Hayes calculated that a full Fed response, including several policy shifts, could lead to new liquidity up to $2.74 to $3.24 trillion: reducing federal funds rate from 4.25% to 0%, which could be equivalent to about $1.7 in currency prints.
Currently, the Fed is making $60 billion a month in QT. If QT ends in April 2025, Hayes will provide a liquidity injection of $540 billion relative to previous expectations. Additional Treasury purchases purchased by the Federal Reserve or U.S. Commercial Bank (the latter with the aid of a relaxation of supplemental leverage) could add another $500 billion to $1 trillion in U.S. dollar credit.
He compared it to the $4 trillion stimulus during the 19 pandemics. Given that Bitcoin jumped from its 2020 low to its 2021 high in response to liquidity waves, even a more conservative 10x multiple may be working. “For those who have reached $1 million in Bitcoin during Trump’s presidency,” he declared, linking massive credit creation to higher prices for BTC.
Although he is optimistic about long-term predictions, Hayes believes that Bitcoin is Direct prospect Probably rock. Hayes believes that Bitcoin re-examines the potential of $70,000 to $80,000 in the near term – higher than the all-time highs in previous cycles, but still below the current market. “If Bitcoin leads the market’s shortcomings, it will also do so in terms of upwards,” Hayes wrote.
He cited major escalations around mid-January (Trump’s inauguration schedule) until the pullback to $78,000 in late February. “Bitcoin screams, even if the U.S. stock market index is still close to its all-time high and the liquidity crisis is coming,” he said. “I firmly believe we are still in the bull cycle, and the worst is the all-time high of $70,000 in the previous cycle.”
Hayes believes that the “Kiss of Death” is not about the demise of Bitcoin, but about the outdated Fiat system that strives to curb debt burdens and political marginality. He believes that short-term chaos in traditional markets (threshold-driven spending cuts and the Fed triggered by hesitation) will eventually pave the way for a new round of monetary expansion.
Bottom line? Hayes insists that focusing on liquidity is the best strategy: “Let politicians do politicians’ things, stay in the driveway and buy bitcoin.”
At press time, BTC was trading at $83,725.
Featured images from YouTube, charts from TradingView.com
