By
Josh O'Sullivan
April 30th, 2024
The co-founder and former CEO of BitMEX believes that the upcoming halving event coincides with a period of heightened US dollar liquidity.
Arthur Hayes, an American investor and co-founder of the cryptocurrency exchange BitMEX, has once again shared his insights into potential Bitcoin (BTC) behavior before and after the highly anticipated halving event slated to occur between April 16 and 20 this year.
In his latest blog post, titled Heatwave, the former BitMEX CEO predicted that the leading crypto asset will suffer a double blow after the halving event, which the industry believes will usher in a new wave of bullish market trends.
A Bag of Tricks
Hayes explained that the expected decline in Bitcoin’s value will be triggered by various tactics he likened to a “bag of tricks” employed by the United States Federal Reserve and the Department of Treasury. He suggested that these governmental maneuvers might prompt investors to hastily sell off their digital asset holdings, leading to a prolonged negative impact on the market.
While Hayes acknowledged the potential short-term benefits of the halving event on cryptocurrencies, he expressed concern that the market could turn bearish in the long run.
He also noted that the prevailing belief in the positive effects of the halving on crypto prices is deeply ingrained. However, he cautioned that in situations where the majority of market participants anticipate a particular outcome, the opposite tends to happen.
“The narrative of the halving being positive for crypto prices is well entrenched. When most market participants agree on a certain outcome, the opposite usually occurs,” he said.
US Dollar Liquidity to Influence Bitcoin Price
Hayes also mentioned another factor that could play a role in the anticipated decline of Bitcoin (BTC) before and after the halving: dollar liquidity constraints. The co-founder and former CEO of BitMEX believes that the upcoming halving event coincides with a period of heightened US dollar liquidity. He suggests that this increased liquidity could lead to greater selling pressure on digital assets, ultimately resulting in a market depreciation.
Nonetheless, Hayes anticipates that following May 1st, the quantitative tightening (QT) cycle will alleviate, returning to a more typical pattern in alignment with US inflation trends.
In his blog, Hayes noted that the latter part of April would mark a “precarious period for risky assets”. He attributed the decline to several factors, including the US tax payments reducing liquidity, the Federal Reserve initiating quantitative tightening to decrease the money supply, and the Treasury’s General Account (TGA), essentially the government’s checking account, remaining untapped.
Hayes Could Be Wrong About Bitcoin
Despite the predicted negative outcome for BTC and the broader crypto market, Hayes also acknowledged that he could be wrong.
“Could the market defy my bearish inclinations and continue higher? Fuck yeah. I’m perennially long as I fuck crypto, so I welcome being wrong,” he wrote.
Bitcoin has often defied predictions in the past as it follows no rules. The crypto asset hit a new milestone of $73,000 for the first time since its inception after dropping to as low as $16,000 in November 2022 following the market decline.
According to CoinMarketCap data, the digital asset is currently trading at around $70,737, with a 6.34% increase in the last seven days.