Bitcoin, ethereum, XRP and other major cryptocurrencies have rocketed higher this week—with U.S. president Joe Biden potentially set to shake up the market next week.

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The bitcoin price has doubled over the last 12 months, staging a huge recovery following the implosion of major exchange FTX (though an even bigger shock could be just around the corner).

Now, legendary bitcoin and crypto trader Arthur Hayes has predicted the arrival of "global wartime inflation" will trigger a massive $1 million bitcoin price bull run.

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"America’s military budget is set to truly explode," Hayes, who cofounded crypto derivatives pioneer BitMex, wrote in a wide-ranging blog post that pointed to the potential for escalation in the war between Israel and Hamas in Gaza.

"This will increase future government borrowing, and the sky's the limit when it comes to the sums of capital a war can waste," Hayes wrote. "If long-term U.S. Treasury bonds offer no safety for investors, then their money will seek out alternatives. Gold, and most importantly, bitcoin, will begin rising on true fears of global wartime inflation."

In this scenario, the bitcoin price could climb to $1 million, Hayes predicted in an X (Twitter) post.

The $25 trillion U.S. government bond market has suffered from extreme volatility in recent weeks, sparking panic on Wall Street as yields—which move inversely to bond prices—on 10-year U.S. Treasury notes topped 5% for the first time in 16 years.

The U.S. Federal Reserve and other central banks around the world have been grappling with soaring inflation in the wake of unprecedented Covid-era money printing and supply shocks. The Fed has hiked rates at a historical clip in order to bring run-away inflation under control but causing bitcoin, crypto and stock market chaos over the last two years.

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“And the end game, when yields get too high, is for the Fed to end all pretence that the U.S. Treasury market is a free market. Rather, it will become what it truly is: a Potemkin village where the Fed fixes the level of interest at politically expedient levels," Hayes wrote.

"Once everyone realises the game we are playing, the bitcoin and crypto bull market will be in full swing. This is the trigger, and it’s time to start rotating out of short-term U.S. Treasury bills and into crypto."

For now, other market watchers are eyeing next week's Federal Reserve Federal Open Market Committee (FOMC) interest rate meeting.

"The FOMC is coming up next week and the market’s atmosphere could drastically change," Yuya Hasegawa, crypto market analyst at Tokyo-based Bitbank, wrote in an emailed note.

"Recent economic data have demonstrated the U.S. economy’s strength, so a likely scenario is that the Fed will keep its policy rate unchanged but Federal Reserve chair Jerome Powell will try to counter market’s expectation that rate hikes are over at his press conference. This will likely lead to another rise in treasury yields, but for the Fed, that could restrain the economy without actually raising policy rates: so two birds one stone. This is why bitcoin's potential significant upside risk has a short expiration date: it could print another leg up in the next couple of days and then enter a correction phase, or it could stay at the current level until next week’s FOMC and then start to pull back."