Bitcoin (BTC) trading OG Arthur Hayes now predicts that BTC prices will crash by up to 40% in March.
The former CEO of cryptocurrency trading giant BitMEX warned readers in a blog post on January 4 that there would be a week of chaos due to the financial market hit.
Hayes: “I could easily see a 30-40% correction” in BTC price
Bitcoin bulls are feeling confident overall this year as the first Bitcoin exchange-traded fund (ETF) in the U.S. is set to receive regulatory approval.
This event, combined with the block subsidy halving in April, could mark a landmark year for BTC price growth thanks to institutional funding and widespread adoption.
That said, things aren’t destined to go up in a straight line for Hayes. That’s because the U.S. Federal Reserve, he says, is trying to stabilize an economy that has been mired in instability even as it keeps inflation down.
Notably, March marks the end of the Federal Reserve’s Bank Term Financing Program (BTFP), which was established to respond to regional banking crises in 2023. One week later, the Federal Open Market Committee (FOMC) must decide whether to raise, hold, or cut interest rates.
“BTFP expires on March 12 and the Fed’s interest rate decision will be announced on March 20. There are six trading days between these two critical decision points,” Hayes said.
“If my prediction is correct, the market will likely drive a few banks out of business within that period, causing the Fed to cut interest rates and announce the reopening of BTFP.”
Bitcoin and cryptocurrencies are very sensitive to macro liquidity changes, and a bailout from the Federal Reserve will certainly help their cause. But only after the initial shock of a rerun of volatility in 2023.
“Bitcoin will initially decline sharply in the broader financial markets but will likely rebound prior to the Federal Reserve meeting. This is because Bitcoin is not a liability of the banking system and is the only neutral reserve currency traded globally,” Hayes continued.
“Bitcoin knows that when things get bad, the Fed always responds with liquidity injections.”
He added that Bitcoin “will always be known as printed money, in whatever guise it takes.” Therefore, he added, “we will see a sharp rise before the Fed finally capitulates before restarting its money printers.”
The card’s likely drop will be between 20% and 30% from the level BTC/USD is trading at at the start of March. Hayes explains that the halving will serve as the ultimate catalyst for the continuation of the rally.
He summarized it this way:
“I could easily see a 30-40% correction due to the dollar liquidity carpet. This is why you will not be able to purchase Bitcoin until after the March decision date.”
Bitcoin analysts are divided on ETF impact
As we approach the present, the ETF approval story continues to cause BTC price volatility.
Related: Bitcoin Bull Market Indicator ‘Almost Reset’ as BTC Price Stays at $43,000
Concerns about potential rejection led to a loss of nearly 10% this week. At the same time, various commentators believe that Bitcoin is already subject to a bigger correction even if ETFs become a reality.
In response, John Bollinger, creator of the Bollinger Bands volatility indicator, predicts a positive reaction based on the readings of his tool.
“I think it’s higher,” he said. conclusion Find out about BTC/USD on X (formerly Twitter).
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.