Hayes, confident in his trading abilities, plans to capitalize on the imminent correction by attempting to “top-tick” the market in late February.
In a recent article titled “Signposts”, Arthur Hayes, the co-founder of BitMEX, shared insights into his trading strategy, predicting up to 40% correction for Bitcoin (BTC) in early March. Hayes, known for his expertise in the crypto space, detailed his rationale for the anticipated correction and outlined the key factors influencing his trading decisions.
Arthur Hayes Anticipates Bitcoin Correction and Decision Points
Arthur Hayes predicts a healthy 20% to 30% correction for Bitcoin from its early March level, potentially escalating to 30% to 40% if US-listed spot Bitcoin Exchange-Traded Funds (ETFs) start trading and drive Bitcoin’s price above $60,000. He links this potential correction to a dollar liquidity rug pull and expresses hesitance to buy Bitcoin until the decision dates in March have passed.
Hayes identified three critical variables colliding in March that could impact the crypto market. The first variable is the Reverse Repo Program (RRP) Balance Decline. Hayes highlighted the importance of monitoring the RRP balance, suggesting that a near-zero balance could signal a market downturn.
Hayes also mentioned that the Bank Term Funding Program (BTFP) Renewal is an important aspect to keep an eye on. He stressed that the decision to renew the BTFP on March 12th is critical, with significant consequences for banks seeking cash to swap with US Treasuries.
The third variable mentioned by Arthur Hayes in the Bitcoin forecast is the Federal Reserve Rate Cut. The Fed‘s March meeting on the 20th may see its first rate cut since 2021, influencing the market’s assumption of future dollar liquidity.
Hayes, however, emphasized the interdependence of these variables and the importance of considering their sequence in shaping the market’s perception. He stressed the need to assign probabilities to different scenarios and anticipate the market’s reactions, cautioning against additional risk during this period.
Hayes, confident in his trading abilities, plans to capitalize on the imminent correction by attempting to “top-tick” the market in late February. He intends to purchase put options expiring on June 28th to protect against a potential downturn. By choosing a longer expiration date, Hayes aims to mitigate the impact of premium decay while allowing for greater flexibility in managing the trade.
Hayes’ Long-Term Bitcoin Bullish Strategy
Hayes concludes by outlining his tactical trading decisions, including the use of Bitcoin Put options as a hedge against the anticipated correction. However, he warns against additional risk during this period, highlighting the uncertainty surrounding the identified decision points in March. Despite the short-term caution, Hayes maintains a bullish long-term outlook, expecting market conditions to normalize by late March.
Currently trading at $43,952, Bitcoin has experienced a slight recovery from its recent fall, driven by speculation about the potential approval of a Bitcoin ETF. Notably, Hayes’ statements echo predictions by industry participants, such as QCP Capital analysts, who foresaw a significant correction to $36,000 after the approval of a spot Bitcoin ETF.
Popular crypto analyst Will Clemente also noted in an earlier report that corrections are natural after substantial price increases, providing a stronger foundation for future upward movements.