Arthur Hayes: Bitcoin signaled a tightening of the dollar's economic credit system before Nasdaq.

PANews reported on February 18th that, according to Cryptopolitan, BitMEX co-founder Arthur Hayes stated in a recent article that the continued decline in Bitcoin prices while the Nasdaq 100 index remains relatively stable may be an early warning sign of a tightening credit crunch in the US dollar economy, foreshadowing a broader credit crisis. He described Bitcoin as a "fiat currency liquidity fire alarm," reacting faster than traditional indicators such as stocks. Hayes pointed out that Bitcoin is highly sensitive to changes in the financial system, and its price decline while the Nasdaq remains stable usually means that financial system problems not yet reflected in stocks are about to affect a wider market. He also warned that the impact of AI on white-collar jobs could lead to a large number of people losing income and struggling to repay credit cards, car loans, and mortgages.

Rising default rates will prompt banks to tighten credit, further slowing the flow of funds in the economy. The most vulnerable banks may go bankrupt due to a lack of funds to cover their obligations. Hayes believes that the Federal Reserve may eventually be forced to intervene on a large scale to prevent a full-blown crisis, and government intervention may make scarce digital assets like Bitcoin more attractive by eroding trust in the traditional monetary system. Hayes proposes two possible paths: first, Bitcoin's drop from $126,000 to $60,000 has already priced in an economic slowdown, with stocks following suit; second, Bitcoin's decline continues, and stocks will subsequently also factor in credit risk. Regardless of the path, the end result will be a large injection of funds into the system to prevent a banking crisis. This response may offset Bitcoin's decline and push it to new highs after the system stabilizes.