Former head of the cryptocurrency exchange BitMEX, Arthur Hayes, has presented his new essay titled «Trial Cut» (Ski Cut), in which he explores the connection between Donald Trump’s tariff policy, U.S. monetary policy, and the dynamics of the cryptocurrency market. In his essay, the author draws an analogy between skiing descents and the current economic situation, attempting to show how conditions in the financial world are changing.
This is reported by Finway
Economic Consequences of Tariff Policy
Hayes analyzes the consequences of the radical tariff policy of the Trump administration, based on how such measures can lead to «financial avalanches» in the bond market. He notes that the volatility of the debt market has become a key marker for decision-making by the Federal Reserve (Fed) and the U.S. Treasury, and also affects the price of Bitcoin.
According to the author, the repurchase of Treasury bonds that the government may undertake will create ideal conditions for Bitcoin’s growth. Hayes believes that the current situation resembles the «bottom» of 2022, after which significant growth in cryptocurrencies began.
The ski season in Hokkaido ended for me in mid-March. However, the lessons learned on the slopes can also be applied to Donald Trump’s tariff policy.
The author compares the so-called «Liberation Day» of Trump to a test cut on a ski slope, where the U.S. administration took radical measures that turned out to be worse than the most pessimistic forecasts of economists. The collapse in financial markets led to trillion-dollar losses, but the real threat lay in the increase in volatility in the Treasury bond market.
Trump’s team, by suspending the imposition of tariffs for all countries except China for 90 days, sought to avoid further volatility. Boston Fed Governor Susan Collins confirmed the regulator’s readiness to take necessary measures to maintain market stability.
How Changes in Tariffs Affect the Market
Hayes examines why the repurchase of Treasury bonds could revive the market, even if these operations do not formally increase the money supply. This mechanism creates indirect liquidity, which can positively impact the price of Bitcoin. He also provides examples of how changes in monetary policy can affect market indicators that compel politicians to alter their decisions.
In conclusion, the author notes that a potential change in Trump’s tariff policy will lead to even greater growth in Bitcoin, which is becoming an increasingly attractive asset for investors seeking alternatives to traditional financial instruments.