Arthur Hayes, co-founder and former CEO of BitMEX, who now manages a family office called Maelstrom, said he expects Bitcoin to rebound to $60,000 by August and then hover between $60,000 and $70,000 by August.
In a blog post early Friday, Hayes said the slow addition of billions of dollars in liquidity each month would dampen negative price action going forward, reversing the prevailing sentiment about market seasonality by suggesting “buy in May and leave.”
Hayes claims that the recent policy announcements from the Federal Reserve and the U.S. Treasury are a “stealth form of money printing,” and while the cryptocurrency market won’t pick up on this right away, he predicts that prices will “hit bottom, and then slowly start to rise.”
Bitcoin BTC
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On Wednesday it hit a low of $56,500, down 23% from its all-time high of $73,836 set on March 14. It’s currently trading for $59,568, according to The Block’s. Pricing page.
BTC/USD price chart. Image: Block/TradingView.
In January, Hayes suggested that cryptocurrency markets could see a significant correction in March, citing conflicting macroeconomic factors.
“Price action has been as expected,” Hayes said Friday. “US tax season, consternation over what the Fed will do, Bitcoin halving selling news events and slowing US Bitcoin ETF assets under management (AUM) growth have combined over the past two weeks to bring about a much-needed market cleanup. came.”
Improved liquidity conditions
Explaining his rationale, Hayes pointed to the Federal Reserve’s announcement this week that it would reduce its rate of quantitative tightening, a tool the central bank uses to reduce the amount of money circulating in the economy, from $95 billion per month to $60 billion. USD liquidity of $35 billion per month.
“More irritating are ‘higher’ interest rates and a decline in QT speeds that require the Fed and the U.S. Treasury to provide interest payment stimulus to the wealthy,” Hayes said.
Hayes also noted the U.S. Treasury’s recent quarterly returns, which highlighted the amount and type of debt issuance needed to fund the government.
Over the next two quarters, the U.S. Treasury plans to borrow more money than previously estimated while reducing the Treasury’s general account (the U.S. government’s primary checking account) by about $90 billion from current levels. The plan is to increase the issuance of short-term bills (abolishing the reverse repurchase system). Hayes said the combined impact of these two, although minor, was also positive for liquidity.
Next, there is a ‘bank that won’t go bankrupt’. The closure of Republic First Bank last month was the first U.S. bank failure this year, when it was acquired by Fulton Bank.
Fulton agreed to the acquisition only if the Federal Deposit Insurance Corporation (FDIC) provided $667 million to make all Republic First depositors whole, Hayes said. “Some deposits are not insured, so why use insurance money for all deposits? The reason is that if all deposits are not covered, a bank run will begin. “This is not a good situation in a democratic republic where elections are held every two years,” he added.
Ahead of the US election in November, Hayes proposed that the government would effectively guarantee all deposits in the US banking system. “This is the amount of uninsured deposits reported by the St. Louis Fed, so $6.7 trillion was added secretly,” he said.
“This leads to money printing because the FDIC does not have $6.7 trillion in its insurance fund. Since the funds are not SAFU, you may need to seek advice from CZ. “Once the funds run out, the FDIC will borrow money from the Fed, and the Fed will print money to meet the loan,” he added.
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