Bitcoin May Soar to $500,000 Amid Expanding US Money Supply

Prominent investor and analyst Arthur Hayes believes that expanding US money supply could push Bitcoin to $250,000-$500,000. According to Hayes, the relevant technical mechanisms for expanding the money supply are already in motion.

Hayes notes that this expansion is effectively like money printing, which is driving up the price of Bitcoin and other similar assets such as gold. He describes the current stage as a 'capital misallocation' phase, where new money is being funneled into loans to roll them over and support investments already made.

Hayes also forecasts that Bitcoin could break its all-time high by the end of the year, but notes that political constraints ahead of the US midterm elections may impact this prediction. He believes that Donald Trump's administration will have to explain stimulus measures without directly acknowledging an expansion of the money supply, and that a rapid rise in Bitcoin price right before the elections is unlikely to help Trump politically.

Hayes also spoke about his expectations for Ethereum, stating that it has an attractive risk-return profile due to its underperformance during the previous cycle. He notes that Ethereum still has not surpassed its 2021 all-time high of $5,000 and that this creates a favorable situation for investors who want to take on maximum risk beyond Bitcoin but without facing a sharp drop due to technical protocol errors.