Arthur Hayes predicts Chinese traders will drive the next cryptocurrency bull market.

  • Arthur Hayes believes that Chinese traders will be the catalysts for the upcoming crypto rally.
  • The BitMEX co-founder notes that a weakening of the yuan, amid massive credit issuance, will drive capital into crypto markets.
  • Hayes believes that “Hong Kong will be the conduit through which Chinese capital is allowed to own crypto.”

Hayes sees the US Securities and Exchange Commission (SEC)’s current crackdown on crypto as a potential negative trigger that could cause the market to crash even further. However, Hayes believes that it is China that could lead the way in the next bull market, with the “return of the Chinese trader” amid the weakening of the Chinese yuan being the catalyst to watch out for.

Hong Kong is expected to be the conduit through which Chinese capital is allowed to own crypto financial assets. Hayes believes that the world’s second-largest economy embarking on an insane credit issuance spree could lead to a slowdown in China’s economy, which would weaken the yuan and see massive inflows into crypto.

To weaken the currency, the Peoples Bank of China (PBOC) will look to encourage credit growth in sectors of the economy deemed “good,” such as semiconductors, artificial intelligence (AI), clean energy, and property. The central bank will allow these “good” sectors to access higher loan quotes, with banks “instructed to lend a certain amount of yuan to these sectors.”

Hayes predicts that the weakening of the yuan and the focused approach to attracting crypto and blockchain in Hong Kong will be key factors in the upcoming crypto rally.