The deficit of the Bank of France is “good for Bitcoin”: the opinion of Arthur Hayes

Huge French budget deficit

French Central BankBanque de France) recorded a net loss 7.7 billion euros ($8 billion) for fiscal year 2024, mainly due to negative net interest income and high interest payments.

As a result, the country’s state deficit exceeded 168 billion euros ($176 billion), which is 5.8% GDPsignificantly exceeding the limit 3%established by the European Union.

How does it affect Bitcoin

Co-founder of the crypto exchange BitMex, Arthur Hayes believes that France’s financial deficit can stimulate Multi-billion-dollar euro issue by the European Central Bank (ECB)which will lead to an increase in liquidity and a new inflow of capital in Bitcoin.

‘French capital is leaving the country. The real threat is the withdrawal of investments in France in Germany and Japan, and the United States is changing the world order. This pushes the ECB to print money either now or later by trillions of euros. For crypto, this is another A positive factor,” Hayes said at the Token2049 conference in Singapore.

ECB: Print ‘Now or Later’

Near 60% French bonds They are owned by foreign investors, mainly in Germany and Japan.

The reduction in US investment means that capital, which previously financed the French budget, is no longer coming.

Hayes notes:

“My hypothesis is simple: the ECB either prints now or later. In both cases, control is lost – people prefer either default, denomination, capital control, or money printing to maintain their standard of living.”

French deficit may push the ECB to quantitative mitigation (QE) — purchase of bonds and introducing liquidity into the economy to stimulate spending.

Examples from the past: Bitcoin growth in QE

during previous QE programs of the world’s largest central banks, such as US Federal Reserve, Bitcoin has grown significantly: $6,000 in March 2020 to $69,000 in November 2021, after the announcement of the $4 trillion bond purchase during the COVID-19 pandemic.

Thus, against the backdrop of a possible increase in the money supply in Europe, Bitcoin can gain a new capital influx and strengthen its position as a tool to protect against inflation.