BitMEX’s Arthur Hayes Forecasts 40% Bitcoin Drop
Arthur Hayes, a co-founder of BitMEX, has raised concerns about the potential for Bitcoin (BTC) to undergo a substantial price adjustment in the near future.
In a recent blog entry, Hayes highlighted the possible impact of reduced US dollar liquidity following the Federal Reserve’s cessation of the Bank Term Funding Program (BTFP) in March. He suggested that this move could result in a significant downturn affecting what he refers to as “crypto tourists.”
The BTFP, established in March 2023, aimed to furnish banks and financial institutions with the necessary liquidity to meet depositors’ requirements.
Hayes expressed apprehension that the approval and subsequent trading commencement of spot Bitcoin exchange-traded fund (ETF) applications in the US might intensify a potential Bitcoin sell-off brought on by diminished dollar liquidity.
He projected a potential correction in Bitcoin’s value of 20% to 30% from its early March level. The scenario could worsen if US-listed spot Bitcoin ETFs begin trading, possibly pushing Bitcoin beyond $60,000 toward its 2021 peak of $70,000, leading to a more substantial correction of 30% to 40%.
Moreover, Hayes suggested that a banking crisis stemming from the conclusion of the BTFP might prompt the Federal Reserve to ease monetary policy, potentially aiding Bitcoin in recovering its losses.
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The co-founder speculated about the sequence of events, mentioning that the BTFP’s expiration on March 12th, followed by the Fed’s rate decision on March 20th, could witness market upheavals, possibly resulting in some banks facing insolvency. This could lead to the Fed reducing rates and reinitiating the BTFP.
Hayes pointed out Bitcoin’s resilience amid financial turmoil, highlighting its status as a neutral reserve hard currency that operates independently of the banking system and has global trade recognition. He suggested that Bitcoin typically responds to crises by surging before the Fed’s intervention, as historical patterns indicate the Fed’s tendency to inject liquidity during market downturns.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
