Good morning, and welcome to First Mover. Here’s what’s happening this morning:

And check out the CoinDesk TV show “First Mover,” hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time.

How high can bitcoin fly in the long run? Probably $1 million, according to Arthur Hayes, co-founder and former CEO of crypto spot and derivatives exchange BitMEX.

In an essay titled "The Doom Loop," published Wednesday, Hayes argued that the West's decision to freeze Russia's forex reserves and push the country out of the global payments messaging system SWIFT has set the stage for a so-called doom loop where the current account surplus nations stop investing in dollar-denominated assets like Treasuries and move into bitcoin (BTC) and gold. The U.S., then, would be forced to print even more money to finance its deficits, which, in turn, would bring more hedging demand for perceived inflation hedges like bitcoin.

"The shock of canceling the world's largest energy producer [Russia] from the dominant Western financial system cannot be undone," Hayes wrote. "If [current account] surplus countries, most of which are outside the core Western axis, decide they would rather save in gold, hard commodities, and/or Bitcoin, then they will not purchase Western debt assets."

Countries running current account surplus are net lenders, meaning they park their money into bonds of other nations, helping finance their fiscal deficits. For instance, China, a current account surplus country, is one of the biggest buyers of U.S. Treasuries. The constant demand for Treasuries from China keeps yields or borrowing costs from rising sharply (although they can and do rise due to other factors like expected Fed tightening).

However, if China moves away from Treasuries and into bitcoin and hard assets, the U.S. would have to finance its deficit via domestic lenders or have the central bank print money and buy the government debt, according to Hayes, who pleaded guilty to violating the U.S. Bank Secrecy Act in February.

The latter, popularly known as quantitive easing, can be inflationary, strengthening the case for investing in bitcoin and gold. According to Hayes, the Fed would be forced to launch yield curve control (YCC), a sort of perpetual QE, which involves targeting a longer-term bond yield by a central bank, then buying or selling as many bonds as necessary to hit that objective. The Bank of Japan has been running the yield curve control program for six years and steps up liquidity-boosting bond purchases every time the 10-year yield threatens to penetrate the 0.25% cap.

"When it is finally implicitly or explicitly declared, it's game over for the value of the USD vs. gold and, more importantly, bitcoin. YCC is how we get to $1 million bitcoin and $10,000 to $20,000 gold. There is no other politically palatable option, and the actions against Russia all but assure that YCC is coming sooner than you think," Hayes noted.

Hayes pointed to a supposedly impending break up of the European Union as another bullish catalyst for bitcoin.

Hayes pointed to the supposedly-impending break up of the European Union (EU) as another bullish catalyst for bitcoin.

"The ECB [European Central Bank] is trapped, the EU is finished, and within the decade we will be trading Lira, Drachmas, and Deutschmarks once more." Hayes wrote. "As the union disintegrates, money shall be printed in glorious quantities in a pantheon of different local currencies. Hyperinflation is not off the table. And again, as European savers smell what the rock is cookin’, they will flee into hard assets like gold and Bitcoin. The breakup of the EU = $1 million bitcoin."

Bitcoin was last seen trading near $38,900, representing a 2% gain on the day. The cryptocurrency's near-term fortune remains tied to technology stocks. Derivatives data shows a potential for a short squeeze higher.

By Omkar Godbole

Traders looking for clues on when alternative cryptocurrencies (altcoins) could begin rallying hard can look at what's happening in the ether-bitcoin chart.

The ratio is seeing a triangular consolidation after the late March rise. A breakout would mean ether (ETH) and altcoin market outperformance relative to bitcoin in the near future.

Today’s newsletter was edited by Omkar Godbole and produced by Parikshit Mishra and Stephen Alpher.