BTC is Expected to Reach $1 Million by 2028 Amidst U.S.-China’s Shallow Trade Agreement

Arthur Hayes has a perspective for cryptocurrency investors and bitcoin enthusiasts fixated on the actions of the Federal Reserve as the United States and China progress towards a trade agreement: they are focusing on the wrong entity.

Hayes expressed in a recent discussion that the pivotal developments are occurring within the Treasury Department, rather than the Fed. He believes that the influence of Jerome Powell, the Fed’s chair, has diminished significantly, whether under a Democratic or Republican administration.

For Hayes, the Federal Reserve has become peripheral, with the actual financial adjustments being orchestrated by Treasury Secretary Scott Bessent. He is allegedly operating stealthily to manage global liquidity through tactics like buybacks and auctions, aimed at addressing the growing U.S. debt burden.

This surge in liquidity, along with the inability of the U.S. to curtail spending, is the reason Hayes predicts Bitcoin could reach $1 million by the year 2028.

According to him, the central concern lies in the quantity of dollars circulating in the economy. “What truly matters is whether the amount of dollars today exceeds that of yesterday,” Hayes stated.

However, he believes monetary policy isn’t the only driving force. He also perceives geopolitical elements as significant, especially concerning the performative trade interactions between the U.S. and China. Hayes suggests that a deal will likely be reached that appears substantial but lacks meaningful impact.

“It will be a superficial agreement,” he suggested, noting the need for both leaders to demonstrate strength—Trump by being tough on China and Xi showcasing resilience against U.S. global influence.

China’s prior handling of its economy during the pandemic indicates a capacity to endure further economic difficulties. With the political consequences of tariffs posing risks, Hayes anticipates a shift toward taxing foreign investments, a more subtle approach to capital control aimed at reducing reliance on external investors without alarming domestic voters. This method may help facilitate an adjustment in trade relations acceptable to the American populace.

“The only effective approach is through capital controls,” he concluded.

A variety of strategies may be considered moving forward, including potential taxes on foreign holdings of Treasuries or equities, or even more forceful actions such as mandatory bond exchanges and increased withholding taxes on capital gains from American assets.

This strategy aims to recalibrate the financial landscape without necessitating American consumption reductions—a concept he asserts would be politically unpalatable.

“Americans resist difficult changes,” he remarked. “They don’t appreciate being advised to consume less.”

From Hayes’s viewpoint, China must continue to invest in U.S. assets to maintain its economic structure, even while outwardly presenting a façade of reduced purchases.

“They need to obscure their actual buying behavior… but mathematically, they can’t cease doing so,” he explained.

For Hayes, this situation inevitably leads to more liquidity flooding the market, with Bitcoin positioned to absorb the excess.

His investment portfolio reflects this belief, allocating approximately 60 to 65 percent to Bitcoin, 20 percent to ether, and the remainder to what he categorizes as “promising altcoins.”

Why this shift? Hayes notes that the marketplace is increasingly seeking cryptocurrencies that demonstrate real utility.

“We’re in a phase focused on fundamentals. Investors are weary of coins without function,” he stated.