Prominent investor and analyst Arthur Hayes said bitcoin could rise to between $250,000 and $500,000 as the U.S. money supply expands through mechanisms he views as effectively printing money. He said bitcoin could surpass its all-time high by the end of the year, although political constraints ahead of the U.S. midterm elections could affect that trajectory.

Hayes said the technical mechanisms needed to expand the money supply were already active. Against that backdrop, bitcoin, gold and similar assets were rising, he said.

He described the current stage as a “capital misallocation” phase in which new money flows into loans used to roll over existing debt and support investments that have already been made.

Political constraints on bitcoin’s rise

Hayes identified the cost of living as one of the main concerns for U.S. voters. He said Donald Trump’s administration would therefore have to explain stimulus measures without directly acknowledging an expansion of the money supply.

A rise in bitcoin to $500,000 immediately before the midterm elections would be unlikely to help Trump politically, Hayes added.

Hayes highlights Ethereum’s risk-return profile

Hayes also said investors seeking maximum risk beyond bitcoin, while trying to avoid a sudden decline caused by a technical protocol error, could consider Ethereum.

“If you want to take on maximum risk outside of bitcoin and not worry that your junk will crash 75% overnight because of some bug in the protocol — that’s Ethereum,” he said.

Ethereum underperformed other major crypto assets during the previous cycle and has yet to surpass its 2021 all-time high of $5,000, according to Hayes. He said that performance created an attractive risk-return profile.

Hayes added that Ethereum was his team’s largest position ahead of the liquidity rally he expects.

Hayes previously published an essay titled Atención.

Source: Incrypted