Bitcoin Halving and Federal Reserve Policy to Depress Crypto Market, Says BitMEX Co-founder

Arthur Hayes predicts a downturn in the crypto market due to the Bitcoin halving and US monetary policies.

Arthur Hayes, co-founder of BitMEX, anticipates a downturn in the crypto market amidst the Bitcoin halving and US Federal Reserve actions. In his recent blog post, Hayes asserts that while the Bitcoin halving may boost prices in the medium term, immediate effects could be negative.

Hayes highlights the prevailing belief in the market that the halving will drive prices up, but he cautions against this consensus, suggesting that contrary outcomes often arise when consensus is strong. He predicts a decline in crypto prices around the halving, attributing it to a combination of factors including tightening dollar liquidity and government policies.

Hayes elaborates on how Federal Reserve and Treasury actions impact the market, suggesting that the current timing of the halving coincides with tighter dollar liquidity. He suggests that these factors will exacerbate a selling spree of crypto assets, leading to a depressed market.

Despite his bearish outlook, Hayes acknowledges the possibility of the market defying his expectations and continuing to rise. However, he maintains a cautious stance and announces his decision to refrain from trading until May.

Looking ahead, Hayes identifies the second half of April as a precarious period for risky assets, citing factors such as US tax payments reducing liquidity, the Fed initiating Quantitative Tightening (QT), and the Treasury's General Account remaining untouched.

Source: Arthur Hayes/Medium

Hayes speculates that following the Fed's meeting on May 1, there may be a reduction in the pace of money supply tightening, coupled with the release of additional liquidity into the system by the Treasury. He suggests that these measures could stimulate markets after a period of slump.

Hayes' decision to abstain from trading until May reflects his cautious approach in light of the uncertain market conditions. Despite Bitcoin's significant year-to-date gains and the prevailing sentiment of greed in the market, Hayes remains skeptical about the immediate future of crypto assets.

Hayes concludes by expressing his preference for avoiding potential losses rather than chasing short-term gains, emphasizing the importance of protecting one's portfolio in volatile market conditions.