Arthur Hayes's latest article: After Trump's "colonization" of Venezuela, he will start the crazy money printing machine. Last year's biggest loss was PUMP

Original: Arthur Hayes

Translation: Yuliya, PANews

Imagine a video call between U.S. President Donald Trump and Venezuelan President Pepe Maduro, at a time when Maduro was flying from Caracas to New York.

Trump: “Pepe Maduro, you are such a bad guy. Your country’s oil is now mine. Long live America!”

Pepe Maduro: “Trump, you crazy!”

Note: In the article, Arthur Hayes refers to the Venezuelan president as “Pepe Maduro” instead of his real name Nicolás Maduro. “Pepe” is a common nickname for “José” in Spanish. Although Maduro’s real name is Nicolás.

Regarding the historic, subversive, autocratic, militarized event of the U.S. “kidnapping” or “legally arresting” a sovereign leader, people can attach various positive or negative labels. Countless AI-assisted writers will surely produce lengthy articles interpreting these events and predicting the future. They will judge these actions morally and suggest how other countries should respond. But this article is not about that. The core question is: Will the U.S. “colonization” of Venezuela push Bitcoin/cryptocurrency prices up or down?

( The only rule in politics: Re-election

To answer this question, we must understand a simple and brutal political reality: All elected politicians focus on only one thing at any time — winning re-election. Anything grand like God or the nation must come after winning votes. Because without power, you cannot bring change, so to some extent, this obsession with re-election is rational.

For Trump, two elections are crucial: the 2026 midterms and the 2028 presidential election. Although he himself does not need to run in 2026 and cannot run for a third term in 2028, the loyalty and obedience of his political supporters depend on their own re-election prospects. Those who diverge from the “Make America Great Again” (MAGA) camp do so because they believe that continuing to follow Trump’s directives will diminish their chances of being elected in the future.

![])https://img-cdn.gateio.im/webp-social/moments-38f4bf01ad163f9bb4a8d78cfd4aee3d.webp###

So, how does Trump ensure that undecided middle voters, whether they support the Democrats (blue camp) or Republicans (red camp), cast the “right” vote in November 2026 and 2028?

Currently, the Democratic blue camp is likely to retake the House of Representatives. If Trump wants to be a winner, he must act immediately. There is little time left for policy adjustments to change voter sentiment.

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

So, how to please middle voters? All the flashy cultural wars are insignificant compared to voters’ wallets. The only thing voters care about is the economy — whether they feel wealthy or poor when voting.

For Trump, the simplest way to stimulate the economy is to print money, boosting nominal GDP. This can raise the prices of financial assets, pleasing the wealthy who will donate campaign funds in return. However, in the U.S., each person has one vote. If money printing causes severe inflation and the living costs of ordinary people soar, they will vote the ruling party out.

Trump and U.S. Treasury Secretary Yellen have stated they want the economy to run hot. The question is: how will they control inflation? Inflation that would ruin re-election chances is in food and energy sectors.

For ordinary Americans, the most sensitive inflation indicator is gasoline prices. Because the U.S. has a poor public transportation system and almost everyone drives, oil prices directly affect everyone’s cost of living.

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

When talking about Venezuela’s oil, many quickly point out that the country has the world’s largest proven reserves. But how much oil is underground is not the key; the question is whether it can be extracted profitably. Trump clearly believes that developing Venezuela’s oil can supply oil to refineries in the Gulf of Mexico, and cheap gasoline will help soothe the public by suppressing energy inflation.

Whether this strategy is correct will be answered by the markets for West Texas Intermediate (WTI) and Brent crude oil. As nominal GDP and dollar credit supply increase, will oil prices rise or fall? If GDP and oil prices rise together, the blue Democratic camp wins; if GDP rises but oil prices stay flat or fall, the red Republican camp wins.

The best part of this framework is that oil prices will reflect the reactions of other oil-producing and major military powers (most importantly Saudi Arabia, Russia, and China) to the U.S. “colonization” of Venezuela. Another advantage is market reflexivity. We know Trump will adjust policies based on stock prices, U.S. Treasuries, and oil prices. As long as stocks keep rising and oil remains low, he will continue printing money and pursuing the “colonization” policy to secure oil. As investors, we can react within the same timeframe as Trump, which is the best we can hope for. This reduces the need to predict complex geopolitical outcomes. Traders only need to read charts and adapt.

Below are some chart data and statistical analyses that clearly show why Trump must simultaneously push up nominal GDP while suppressing oil prices to win the election:

![])https://img-cdn.gateio.im/webp-social/moments-012d530030287a31cb5b7cbd9d71c23b.webp###

• Political landscape: The red and blue camps are evenly matched, with only a small portion of Americans deciding which side controls the government.

• Voter focus: The economy and inflation are the two most important issues for voters; everything else is irrelevant.
• “10% Rule”: When the national average gasoline price three months before an election rises by 10% or more compared to January of that year, control of one or more government departments will change hands.

• Election prospects: If the economy does not enter recession, the red camp has the greatest chance of winning the 2028 presidential election.

These charts clearly indicate that Trump must keep the economy hot without causing gasoline prices to rise.

( Bitcoin Price Movements in Two Scenarios

We face two scenarios: one where nominal GDP/credit and oil prices both rise; and another where nominal GDP/credit rises but oil prices fall. How will Bitcoin react?

To understand this, we must first clarify a core point: the importance of oil prices is not because they affect mining costs, but because they can force politicians to stop printing money.

Bitcoin, mined via proof-of-work (PoW), consumes energy, making it a purely monetary abstraction. Therefore, energy prices themselves are unrelated to Bitcoin’s intrinsic value, since all miners’ costs change in sync, which does not alter Bitcoin’s fundamental logic.

The real power of oil prices lies in their ability to trigger political and financial disasters — acting as a “trigger” for chaos.

)# Chain reaction of runaway oil prices

If economic expansion causes oil prices to rise too fast and too high, it will trigger a series of destructive chain reactions:

Uncontrolled oil prices mean soaring living costs for the public, which will directly ignite voter anger and pose a huge risk of the ruling party being ousted. To stay in power, they must do everything possible to lower 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 U.S. bond market volatility, will tell us when oil prices are too high.

Investors face a tough choice: invest in financial assets or physical assets. When energy costs are low and stable, investing in government bonds and other financial assets makes sense. But when energy costs are high and volatile, investing in energy commodities is wiser. Therefore, when oil reaches a certain level, investors will demand higher yields on government bonds (especially 10-year U.S. Treasuries).

When the 10-year Treasury yield approaches 5%, market volatility may spike sharply, and the MOVE index could soar. Currently, U.S. politics struggles to contain deficit spending, and “free benefits” often dominate elections. However, as oil prices rise and yields approach critical levels, markets may come under pressure. Because the current fiat financial system is heavily leveraged, rising volatility forces investors to sell assets or face losses.

For example, last year’s “Liberation Day” on April 2 and Trump’s “TACO” (tariff actions) on April 9 serve as examples. Trump threatened to impose very high tariffs, which would reduce global trade and financial flows, creating a strong deflationary effect. The market plummeted, and the MOVE index briefly soared to 172. The next day, Trump “paused” the tariffs, and the market bottomed out and rebounded sharply.

![]###https://img-cdn.gateio.im/webp-social/moments-9d303a6ca94676550876d5bbd7a249b9.webp###

The MOVE index (white) versus the Nasdaq 100 index (yellow)

In such issues, trying to precisely determine at what level oil prices and 10-year yields will force Trump to tighten money supply based on historical data is pointless. We will naturally know when it happens. If oil prices and yields spike sharply, it’s time to reduce risk asset exposure.

The current baseline scenario is: oil prices remain stable or decline, while Trump and Yellen print money wildly like in 2020. The reason is that initially, the market will believe that U.S. control of Venezuela’s oil will significantly boost daily crude output. Whether engineers can actually achieve millions of barrels per day in Venezuela is not important.

What truly matters is that Trump’s rate of money printing will be faster than Israeli Prime Minister Benjamin Netanyahu’s constant changes in Iran policy. If these reasons are still insufficient to convince investors to go long on all risk assets, remember one thing: Trump is the most socialist U.S. president since Roosevelt. He printed trillions in 2020, and unlike previous presidents, directly handed money to everyone. Rest assured, he will not lose the election due to insufficient money printing.

Based on statements from Trump and his core team, we know credit will expand. Red camp Republican lawmakers will run deficits, the Treasury will issue debt to finance it, and the Fed (whether Powell or his successor) will print money to buy those bonds. As Lyn Alden said, “Nothing can stop this train.” As the dollar supply expands, Bitcoin and certain cryptocurrencies will soar.

( Trading Strategies

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

This year, Hayes plans to focus on his strengths: macro liquidity-based positions, combined with a credible “altcoin” narrative, deploying large medium-term positions. When trading “shitcoins” or Meme coins for entertainment, he will reduce position sizes.

Looking ahead, this year’s dominant narrative will revolve around “privacy.” ZEC will become a bellwether in the privacy space. Maelstrom has been heavily long this token since Q3 2025, aiming to find at least one “altcoin” that can lead trends and generate excess returns over the next few years. To achieve returns surpassing BTC and ETH, he plans to sell some Bitcoin and Ethereum to buy privacy and DeFi “altcoins” with explosive potential.

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