France’s Soaring Budget Deficit Could Fuel Bitcoin Demand, Says Arthur Hayes

     

French Deficit Hits $176 Billion in 2024

France’s growing fiscal crisis may pave the way for more money printing in Europe – a trend that could benefit Bitcoin and the wider crypto market, according to BitMEX co-founder Arthur Hayes.

The Banque de France (BdF) reported a €7.7 billion ($8 billion) net loss in fiscal year 2024, mainly due to heavy interest payments. This pushed the country’s government deficit to €168 billion ($176 billion), equivalent to 5.8% of GDP, well above the European Union’s 3% deficit ceiling.

The shortfall positions France as one of the eurozone’s weakest performers and signals potential capital outflows from the country.

Arthur Hayes: “Trillions of Euros” May Be Printed

Commenting at TOKEN2049 in Singapore, Hayes argued that France’s ballooning debt may force the European Central Bank (ECB) into massive quantitative easing (QE), injecting liquidity that could find its way into Bitcoin.

“French capital is leaving France,” Hayes said. “That predicates the ECB to print now or print later in the trillions of euros… Another great thing for crypto.”

Hayes warned that without foreign capital from Germany, Japan, and the U.S. to support France’s budget, the ECB may have no choice but to print money – regardless of whether it acts sooner or later.

ECB’s Dilemma: Print Now or Later

Around 60% of France’s bonds and debt are held by foreign investors, with Germany and Japan as the largest holders. But with declining U.S. investment and shifting capital priorities, those funds are no longer flowing in at previous levels.

According to Hayes, this leaves the ECB with limited options:

• Print now to sustain French government spending.
• Print later to stabilize the broader European banking system.

“In both cases, they lose control,” Hayes said. “People would rather default, redenominate, impose capital controls, or just print money.”

What This Means for Bitcoin

If the ECB turns to quantitative easing, Hayes expects Bitcoin to be among the biggest beneficiaries. Historically, QE programs have coincided with strong rallies in crypto.

For instance, after the U.S. Federal Reserve launched its $4 trillion QE program in March 2020, Bitcoin skyrocketed from $6,000 to $69,000 by November 2021 – a gain of over 1,050%.

With France’s financial stability under pressure, many investors may view Bitcoin as a hedge against fiat devaluation and monetary expansion in Europe.