Arthur Hayes said the cryptocurrency asset faces a “violent bull sell” around the Bitcoin halving as the Fed uses its “Bag of Tricks” to bail out banks.

BitMEX co-founder Arthur Hayes said Bitcoin and cryptocurrency prices could fall around the time of Bitcoin’s halving as U.S. policymakers use “schemes” to bail out the financial system.

The April 20 halving will coincide with a period of tight dollar liquidity due to tax payments due from April 15 to May 1, he said in a blog post.

“Given that the halving occurs at a time when dollar liquidity is tighter than usual, it will add momentum to the furious selling of crypto assets,” he said. “April will experience extreme weakness in risk asset markets.”

“Heatwave” is an essay about why I am bearish despite the recent uptrend. #Cryptocurrency Market. https://t.co/gZ8Vl1uC04 pic.twitter.com/fH6docB499

— Arthur Hayes (@CryptoHayes) April 9, 2024

Bitcoin is trading above $70,000 again as the market anticipates the halving in less than two weeks. The Bitcoin Fear and Greed Index was 80, indicating ‘extreme greed’.

Hayes said the narrative of the Bitcoin halving being a bullish catalyst is “firmly in place,” but added that past trends show that when markets expect a certain outcome, the opposite tends to happen.

Fed policy will deliver long-term benefits

Hayes said the Federal Reserve is secretly printing money “to bail out the financial system,” which could trigger a long-term rally in cryptocurrencies, gold and stocks.

While some policies will slow liquidity and hemorrhage risk assets in the short term, money printing will be a catalyst for higher cryptocurrency prices in the long term, he said.

Hayes said he decided to suspend trading until May, when the cryptocurrency bull market is expected to resume.

He said, “I hope to return with dry powder ready so that the bull market can begin in earnest in May.”

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