By Michael Scott
BitMEX former chief Arthur Hayes predicts intense turbulence post the Bitcoin halving expected on April 20. The crypto exchange co-founder believes the quadrennial event will spur a raging firesale of crypto assets following the Bitcoin halving.
The BitMex co-founder alleges that the supply crunch to the BTC rewards for completed blocks alongside the bag of tricks that the US Federal Reserve may deploy could propel turbulence in cryptocurrency.
Hayes considers that the crypto industry is vulnerable to the policies enforced by the US Department of Treasury that last year were depressing the crypto market.
Crypto Prices to Plunge Post-Halving
The BitMEX co-founder illustrated in the Monday, April 8 blog post that Bitcoin halving would only realize a medium-term thrust to the crypto prices. However, Hayes warned that crypto prices would plunge post-halving.
Hayes reflected on the entrenched narrative that positive crypto prices are inevitable after Bitcoin halves. He challenged the narrative by indicating that the opposite occurs whenever market participants settle on a particular outcome.
Hayes illustrated that the Bitcoin halving coincides with the dollar liquidity, portraying unusual tightening. The tighter dollar liquidity would prompt contractionary policies from the Fed and Treasury policies that would ultimately affect the crypto markets.
Hayes bases his prediction on the above conditions, which is that Bitcoin would lead other crypto assets into a general slump during halving. Such an occurrence would add the propellant to a raging fire sale of crypto assets.
Hayes acknowledged the possibility of the crypto market defying his bearish inclination and sustaining the pump. Such an outcome would disapprove his prediction, a fate he considers would also benefit his perennially long portfolio.
Treasury and Fed Policies to Impact Crypto Market
Hayes observed that the risky assets could experience a precarious period after mid-April, given the likelihood of tax payments removing liquidity. Also, crypto enthusiasts believe the Fed will likely enforce quantitative tightening and a money supply crunch. However, the US government has yet to use the Treasury’s general account (TGA) as the checking account.
Hayes observed that the Bank Term Funding Program (BTFP) concluded several weeks ago, although not a single bank has reported real stress. The American entrepreneur attributes the Fed and Treasury Department, he considers high priests in finance, to deploy several tricks to bail out the players in the financial system.
Hayes considers that the Fed’s meeting on May 1 could see a reduced pace of tightening money supply. The Treasury could also release $1 trillion from the TGA to boost liquidity, pumping the markets.
Hayes considers that the interplay of Bitcoin halving amid tricks from the Treasury and Fed prompted his decision to freeze trading until May.
Bitcoin Market Activity
At press time 09:27 UTC, Bitcoin appears to lose momentum, with the token down 2.6% to exchange hands at $70,613, taking its total market value to $1.381 trillion as per CoinGecko data.
Bitcoin is 4.71% below the all-time high of $73,737 realized on March 14. Nonetheless, the trading volume of $39.048 billion in the past 24 hours is 60.60% up, signaling elevated market activity.
The slump witnessed in the last 24 hours erodes the seven-day run of Bitcoin to 5.5% while price is 151.4% up in the past year. The 5.5% increase in the past seven days leaves Bitcoin underperforming the global crypto, which is currently 6.20% up. However, Bitcoin has traded in a range today, with the floor price recorded at $69,788.53 before testing at $72,631.62, per CoinGecko data.
Hayes illustrated that if the liquidity scenarios he shares play true, it would yield confidence to conduct multiple trials. He indicates that missing several percent of the gains and avoiding huge losses in the portfolio is acceptable.
Editorial credit: Burdun Iliya / Shutterstock.com
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