BitMEX CEO Arthur Hayes suggested that the Trump administration should move away from the Gold standard and lean more towards establishing a strategic Bitcoin reserve.
Hayes proposed that the best way for the US to achieve economic prosperity is for the Treasury Department to create more dollars by lowering the price of gold to build a Bitcoin reserve.
Hayes Proposes Trump Moves Off Gold Standard
According to the article write Hayes’ latest on Substack, this price cut will allow the Federal Treasury General Account to receive a USD credit.
This credit can then be injected directly into the economy. It eliminates the need for diplomatic efforts to persuade other countries to devalue their currencies against the USD. The greater the gold depreciation value, the larger the credit will be.
Currently, the treasury values gold at 42.22 USD/oz. In Hayes’s opinion, this is too high a price. He explained that if the new Treasury Secretary, Scott Bessent, were to consider a revaluation of between $10K and $20K/oz, the TGA balance would increase immediately.
“Weakening the dollar quickly and dramatically is the first step for Trump and Bessent to achieve their economic goals. This is also something they can accomplish overnight without consulting with domestic lawmakers or foreign finance ministry leaders. With Trump having a year to show progress on a number of goals aimed at helping Republicans maintain control of the House and Senate, my base case is that USD/gold depreciation will occur in the second half. early 2025,” Hayes wrote.
What Will a Bitcoin Reserve Mean for the US Economy?
Arthur Hayes argued that this strategy would naturally increase the price of Bitcoin and other cryptocurrencies if the Treasury decided to use USD credits to buy BTC.
Since the US already owns the largest amount of gold of any other country, it could do the same by creating a Bitcoin reserve. This would assert the nation’s financial dominance over ownership of the world’s most powerful crypto asset.
Since the industry views Bitcoin primarily as a hard currency due to a fixed supply limit, Hayes contends that the strongest government currency will be the one in which the central bank owns the largest BTC reserves.
A government that owns a significant amount of Bitcoin will naturally implement policies that benefit the development of the cryptocurrency industry.
“If the US government creates more USD through lowering the price of gold and uses part of it to buy Bitcoin, its fiat price will increase. This will call for other sovereign nations to buy BTC to keep up with the US. Bitcoin price will then increase asymptotically, because why would someone sell Bitcoin and receive fiat, which the government is actively devaluing?” Hayes explains in his article.
It should also be noted that the US is not the only country considering a strategic Bitcoin reserve. As TinTucBitcoin previously reported, Russian lawmakers are also suggesting the same thing.
Japanese lawmakers introduced similar proposals earlier this month, and Vancouver, Canada, approved a Bitcoin reserve fund plan for its city council. So it’s possible that if the US doesn’t act quickly, international rivals will get ahead.
However, in reality, Hayes does not expect that the Treasury Department will buy Bitcoin. However, lowering the price of gold will create USD, which can be reintroduced into the economy in the form of goods and services or used as a financial asset.
Hayes’ sentiments are consistent with market statistics, as Bitcoin ETFs currently hold more assets under management than Gold ETFs. These funds have only been trading for less than a year.
How Much Time Does Trump Have?
Hayes expressed concern about cryptocurrency investors’ high expectations for the new Trump administration to quickly make changes that benefit the cryptocurrency market.
He predicted Trump would need at least a year to resolve real domestic and international problems.
At the same time, the president-elect will need to show results almost immediately, as the majority of lawmakers will begin campaigning for the midterm elections just a year after Trump took office.
If patience runs out and sentiment quickly turns negative, Hayes predicts there will be investor remorse.
“Markets will immediately wake up to the reality that Trump, at best, has a year to implement any policy changes around January 20. This realization will lead to a vicious sell-off listed in the cryptocurrency market and Trump 2.0 stock transactions,” he said.
Since Trump has little time to make a change, Hayes emphasized that lowering the price of gold is the most time-efficient way to generate money and stimulate the economy.
“People are impatient because they are desperate. Trump is a sharp politician and understands his voter base. To me, that means he has to act strong early, which is why my money is on a strong USD-gold depreciation in his first 100 days in office. This is an easy way to make global manufacturing cost competitive in the US quickly,” he concluded.
Hayes is not the only one who shares this view. Last month, Republican Senator Lummis also proposed that the Fed should sell part of its gold to buy 1 million BTC and fund a Bitcoin Reserve.