Arthur Hayes' latest article: Trump will unleash a crazy money-printing machine after "colonizing" Venezuela; PUMP suffered the biggest loss last year.

Original text: Arthur Hayes

Compiled by: Yuliya, PANews

Imagine a video call between US President Donald Trump and Venezuelan President Pepe Maduro, while Maduro is flying from Caracas to New York.

*Note: Arthur Hayes refers to the Venezuelan president as "Pepe Maduro" in the article, rather than his real name, Nicolás Maduro. "Pepe" is a common nickname for "José" in Spanish, although Maduro's name is Nicolás.

The historic, subversive, authoritarian, and militarized event of the United States "kidnapping" or "legally arresting" the leader of a sovereign nation can be labeled with a variety of positive and negative tags. Countless AI-assisted writers will undoubtedly churn out a plethora of articles interpreting this event and predicting the future. They will judge these actions from a moral standpoint and advise other countries on how to respond. But this article has no intention of doing so; the core question is singular: Will the US "colonization" of Venezuela drive up or down the price of Bitcoin/cryptocurrencies?

The only rule of politics: reelection

To answer this question, we must understand a simple and brutal political reality: all elected politicians focus on only one thing at all times—winning re-election. Grand narratives about God or the nation take a backseat to winning votes. Because without power, you cannot bring about change, this obsession with re-election is, to some extent, rational.

For Trump, two elections are crucial: the 2026 midterm elections and the 2028 presidential election. While he himself will not need to run in 2026, nor will he be eligible for a third term in 2028, the loyalty and obedience of his political supporters depend on their respective prospects for re-election. Those who have turned away from the "Make America Great Again" (MAGA) movement do so precisely because they believe that continuing to follow Trump's directives will bleak their future prospects for re-election.

So how can Trump ensure that swing voters who have not yet decided to support the Democrats (blue camp) or the Republicans (red camp) will cast the “right” vote in November 2026 and 2028?

It appears that the Democratic Party, favoring the blue camp, is likely to regain control of the House of Representatives. If Trump wants to emerge victorious, he must act immediately. Time is running out to adjust policies and change voters' minds.

What do voters care about? The economy, especially oil prices.

So how do you win over swing voters? All the fancy cultural battles are worthless compared to voters' wallets. Voters only care about the economy —whether they feel rich or poor when they vote.

For Trump, the simplest way to stimulate the economy is to turn on the printing presses and boost nominal GDP. This would drive up financial asset prices, pleasing the wealthy who would "repay" him with campaign donations. However, in the United States, it's one person, one vote. If printing money leads to severe inflation and a surge in the cost of living for ordinary people, they will use their votes to oust the ruling party from power.

Trump and Treasury Secretary Bessant have stated they will keep the economy running smoothly. The question is, how will they curb inflation? The kind of inflation that could cost them their re-election chances is inflation in the food and energy sectors.

For the average American, the most sensitive indicator of inflation is gasoline prices. Because the US public transportation system is underdeveloped and almost everyone drives, gasoline prices directly impact everyone's cost of living.

Therefore, Trump and his deputies "colonized" Venezuela for its oil.

When discussing Venezuela's oil, many people immediately point to the country's world-leading proven reserves. But the amount of oil underground is less important than the profitability of its extraction. Trump apparently believes that by developing Venezuela's oil resources, the oil can be shipped to refineries in the Gulf of Mexico, and cheap gasoline will appease the public by curbing energy inflation.

Whether this strategy is correct will be answered by the West Texas Intermediate (WTI) and Brent crude oil markets. Will oil prices rise or fall as nominal GDP and dollar credit supply increase? If GDP and oil prices rise in tandem, the blue-camp Democrats will win; if GDP rises while oil prices remain flat or fall, the red-camp Republicans will win.

The best part of this framework is that oil prices will reflect all the reactions of other oil-producing countries and military powers (most importantly Saudi Arabia, Russia, and China) to the US "colonization" of Venezuela. Another advantage is the market's reflexivity. We know that Trump will adjust his policies based on stock prices, US Treasury bonds, and oil prices. As long as stock prices continue to rise and oil prices remain low, he will continue to print money and pursue "colonial" policies to acquire oil. As investors, we can react in the same timeframe as Trump, which is the best-case scenario we can expect. This reduces the need to predict the outcome of complex geopolitical systems. Traders simply need to read the charts and adapt accordingly.

The following charts, data, and statistical analyses clearly demonstrate why Trump must push up nominal GDP while simultaneously suppressing oil prices in order to win the election:

• Political landscape: The red and blue camps are evenly matched, with only a small group of Americans deciding which camp controls the government.
• Voter focus: The economy and inflation are the two issues that voters care about most; everything else is secondary.
• The “10% rule” states that when the national average gasoline price in the three months leading up to an election is 10% or more higher than the average price in January of the same year, control of one or more government departments will change hands.
• Election Outlook: If the economy does not experience a recession, the Red camp has the best chance of winning the 2028 presidential election.

These charts clearly demonstrate that Trump must keep the economy running smoothly without causing gasoline prices to rise.

Bitcoin price movements in two scenarios

We face two scenarios: one is that both nominal GDP/credit and oil prices rise; the other is that nominal GDP/credit rises while oil prices fall. How will Bitcoin react?

To understand this, we must first clarify a core point: oil prices are crucial not because they affect mining costs, but because they have the power to force politicians to stop printing money.

Bitcoin's energy consumption through Proof-of-Work (PoW) mining makes it a purely monetary abstraction. Therefore, energy prices are irrelevant to the price of Bitcoin, as the costs for all miners change synchronously, which does not alter Bitcoin's intrinsic value logic.

The true power of oil prices lies in their ability to act as a trigger for political and financial disasters.

The chain reaction of runaway oil prices

If economic expansion leads to excessively rapid and high oil price increases, it will trigger a series of devastating chain reactions:

Out-of-control oil prices mean soaring living costs, which will directly ignite voter anger and put those in power at great risk of being ousted . To retain power, they must do whatever it takes to suppress oil prices (e.g., stealing oil from other countries or slowing credit creation). The 10-year U.S. Treasury yield and the MOVE index, which measures volatility in the U.S. bond market, will tell us when oil prices are too high.

Investors face a difficult choice: invest in financial assets or real assets. When energy costs are low and stable, investing in financial assets such as government bonds makes sense. But when energy costs are high and volatile, investing in energy commodities is wiser. Therefore, when oil prices reach a certain level, investors will demand higher yields from government bonds, especially 10-year U.S. Treasury bonds.

When the 10-year US Treasury yield approaches 5%, market volatility could increase significantly, and the MOVE index might surge. Current US politics struggle to curb deficit spending, and "free benefits" often hold an advantage in elections. However, with rising oil prices and yields nearing critical levels, the market may face pressure. Because the current fiat currency financial system is heavily leveraged, investors must sell assets or risk losing everything when volatility rises.

For example, April 2nd last year, "Liberation Day," and the subsequent Trump "TACO" (tariff action) on April 9th are case studies. At the time, Trump threatened to impose extremely high tariffs, which would have reduced imbalances in global trade and financial flows, thus creating a strong deflationary effect. The market reacted with a sharp drop, and the MOVE index surged to 172 at one point during the day. The next day, Trump "suspended" the tariffs, and the market subsequently bottomed out and rebounded sharply.

MOVE Index (white) vs. Nasdaq 100 Index (yellow)

On such issues, attempting to pinpoint the exact levels of oil prices and 10-year yields that would force Trump to tighten money printing is pointless. We'll know when we see it happen. If oil prices and yields rise sharply, then we should reduce our bullish stance on risky assets.

The current baseline scenario is that oil prices will remain stable or even decline, while Trump and Bessett will print money like they did in 2020. This is because the market initially believes that US control of Venezuelan oil will significantly increase daily crude production. Whether engineers can actually achieve millions of barrels per day of production in Venezuela is irrelevant.

The real key point is that Trump will print money faster than Israeli Prime Minister Benjamin Netanyahu keeps changing the reasons for striking Iran. If this logic still isn't enough to convince people to go long on all risk assets now, just remember this: Trump is the most socialist-leaning US president since Roosevelt. He printed trillions of dollars in 2020 and, unlike previous presidents, distributed the money directly to everyone. It's safe to say he won't lose the election because he doesn't print enough money.

Based on statements from Trump and his core team, we know that credit will expand. Red-camp Republican lawmakers will engage in deficit spending, Bessant's Treasury will issue debt to finance it, and the Federal Reserve (whether Powell or his successor) will print money to buy those bonds. As Lyn Alden said, "Nothing can stop this train." With the expansion of the dollar supply, the prices of Bitcoin and certain cryptocurrencies will skyrocket.

Trading Strategies

Arthur Hayes' biggest loss last year came from trading after the launch of the PUMP token. Also, remember to stay away from Meme coins; his only profitable Meme coin trade last year was Trump. On the bright side, most of his profits came from trading HYPE, BTC, PENDLE, and ETHFI. Although only 33% of his trades were profitable, with proper position sizing, the average profit on winning trades was 8.5 times the average loss on losing trades.

Arthur Hayes plans to focus his efforts this year on his strengths: large-scale, medium-term position deployments based on a clear macro liquidity argument and a credible "altcoin" narrative. Position sizes will be reduced when trading "junk coins" or meme coins for recreational purposes.

Looking ahead, this year's dominant narrative will revolve around "privacy." ZEC will become a bellwether in the privacy field. Maelstrom has already taken a large long position in the token in Q3 2025, planning to find at least one "altcoin" in the privacy field that can lead the trend and bring excess returns to the portfolio in the coming years. In order to obtain excess returns that surpass BTC and ETH, it plans to sell some Bitcoin and Ethereum in exchange for "altcoins" with greater explosive potential in the privacy and DeFi fields.

Once oil prices rise and cause credit expansion to slow, they will take profits, accumulate more Bitcoin, and buy some mETH.