TL;DR
- Monetary drivers: Hayes argues Bitcoin’s rise is now shaped by Trump and Xi’s liquidity policies rather than halving cycles.
- Historic cycles: Past Bitcoin booms aligned with U.S. and Chinese credit expansions, collapsing when liquidity tightened.
- Future outlook: With Trump cutting rates and Xi cautiously easing, Hayes sees cheaper money ahead, fueling Bitcoin’s continued ascent.
Bitcoin’s latest rally, according to Arthur Hayes, is not being fueled by its traditional halving cycle but by the monetary maneuvers of Donald Trump and Xi Jinping. In his essay Long Live the King, the BitMEX co-founder argues that liquidity decisions in Washington and Beijing now outweigh programmed scarcity in shaping Bitcoin’s trajectory.
Governments print, societies resist
Hayes frames money as a “devilish construct” that prices scarcity. He contends that governments inevitably debase their currencies because politicians refuse to wait for genuine breakthroughs that could expand supply. Instead, they print more, forcing societies to seek alternatives. Bitcoin, he says, emerged as a timely defense against monetary overreach, offering a decentralized form of sound money. Its valuation, however, still hinges on the dollar’s dominance, making U.S. liquidity the key driver of price cycles.
Historical cycles shaped by liquidity
Hayes recalls three major Bitcoin cycles. The Genesis cycle (2009-2013) was propelled by Federal Reserve quantitative easing and Chinese credit expansion, only to collapse when both slowed. The ICO cycle (2013-2017) thrived on yuan devaluation and credit growth before ending as liquidity tightened. The COVID cycle (2017-2021) saw unprecedented U.S. stimulus under Trump, doubling the dollar supply, while China restrained property speculation. When inflation surged and the Fed turned hawkish, the bull run ended.
A shifting global order
From 2021 onward, Hayes argues, America is no longer the unchallenged empire. To mask structural change, U.S. policymakers injected trillions through Treasury operations, draining the Fed’s Reverse Repo Program. Meanwhile, China battled deflation by curbing property values, limiting its liquidity role. Despite claims that the bull market is over, Hayes insists liquidity will return, citing dovish signals from both the Fed and the People’s Bank of China.
Trump, Xi, and the next phase
Hayes highlights Trump’s push to “run the economy hot” by cutting rates and lowering housing costs, alongside plans to deregulate banks. In China, Xi may not unleash massive credit waves, but he will not obstruct global liquidity growth. Hayes concludes that both leaders are signaling cheaper, more plentiful money, ensuring Bitcoin’s rise continues. “The king is dead, long live the king,” he writes, underscoring Bitcoin’s resilience in a world of manipulated currencies.
