Arthur Hayes tells Europeans sell euros and buy Bitcoin

Arthur Hayes published an essay on Oct. 2 calling European Central Bank President Christine Lagarde a "criminal" and telling readers to sell euro assets and buy Bitcoin. The former BitMEX CEO titled his piece "Bastille Day" and argued that France's worsening finances and ECB monetary policy put the euro at risk.

Hayes pointed to France's growing TARGET2 deficit as evidence of capital flight. TARGET2 is the settlement system that tracks cross-border payment flows between euro-area central banks. When money moves from one country's banking system to another within the eurozone, it shows up as claims and liabilities in these balances. France's negative balance has been deepening, which Hayes says means French savers are shifting money to stronger banking systems elsewhere in the currency bloc.

He warned that France is "too big to bail" and predicted the ECB would have to expand its balance sheet to stabilize banks. Hayes wrote that hundreds of billions of euros could try to leave France if confidence drops, forcing the ECB to inject "trillions" in liquidity. He said this would debase the currency and recommended investors exit euro-denominated assets and hold Bitcoin as protection against potential capital controls.

Also read: ECB: cash is critical in crises and access must be guaranteed