Arthur Hayes, a crypto entrepreneur best known as the cofounder of BitMEX, has identified France as the next potential weak point in the euro system. But what is surprising, he argues, is that this is the perfect setup for Bitcoin.
In a new longread named "Bastille Day," Hayes claims that the country's worsening fiscal and banking issues make it "too big to bail" within the European Union. This leaves the European Central Bank (ECB) with only one option: printing trillions of euros. And here the cryptocurrency twist emerges.
At the heart of his argument is the TARGET2 system, the eurozone’s internal settlement ledger. France, once a surplus holder, now has the largest deficit, indicating that savers are moving capital to safer jurisdictions, such as Germany and Luxembourg.
Bitcoin for the win
One of the main structural problems, according to Hayes, is that France’s debt is largely financed by foreign capital, with Germany and Japan ranking as top creditors.
As these countries repatriate funds to support their domestic economies, France is left without willing lenders. Given its "ballooning" budget deficit and fractured political system, Hayes believes capital controls and eventual redenomination into a weaker franc are only a matter of time.
When that moment arrives, he expects savers and investors to seek safety outside the eurozone. Gold and U.S. equities may attract some investment, but Hayes argues that Bitcoin offers the fastest and most reliable exit.
"Either the ECB prints now or prints later," Hayes writes, "but Bitcoin doesn’t care."
Dan Burgin
Vladislav Sopov
U.Today Editorial Team