Bitcoin Expected to Plunge to $35,000 amid Global Uncertainty, Predicts Ex-BitMEX CEO
Summary:
Former BitMEX CEO Arthur Hayes predicts a short-term drop for Bitcoin (BTC) to $35,000 or lower due to global macroeconomic instability. Influencing factors include the Red Sea conflict's effect on global shipping, the upcoming US presidential elections, and forthcoming Federal Reserve policies. Hayes further anticipates that Bitcoin will solidify support ranging from $30,000 to $35,000 due to liquidity issues and geopolitical risks. He advises that it could provide a potential opportunity for traders to 'buy the dip.'
In the face of global macro upheaval, Bitcoin (BTC) is poised for a tumble to $35,000 or even lower, as per predictions by Arthur Hayes. The ex-head of cryptocurrency platform BitMEX expressed his bearish short-term BTC price forecast in a recent blog post, "Yellen or Talkin'?" on January 24.
Despite seeing a 75% growth in contrast to the same period last year, Bitcoin is vulnerable to a number of factors that could trigger a downward price shift this quarter. According to Hayes, this includes events like the mounting U.S.-Houthi tension in the Red Sea with repercussions on global shipping, the impending U.S. Presidential Election, and upcoming policies from the Federal Reserve.
The first aspect directly influences inflation. With the expectation of a Federal Reserve "pivot" in March—featuring reduced interest rates and liquidity reintroduction to the market—cryptocurrencies and other risk assets are on standby. However, increasing shipping expenses might incite a price leap later on, a situation the Federal Reserve and its Chairman, Jerome Powell, will strive to alleviate, as outlined by Hayes.
Hayes mentions that the combination of heightened shipping expenses due to weather and political disruptions could elevate inflation rates in 2023's third and fourth quarters. Powell, being conscious of the situation, would put on a brave face about potential rate declines without necessarily making any cuts. The market might not comprehend the impact of rate cuts and the restarting of QE on escalated shipping-inflicted inflation, but Bitcoin does, Hayes pointed out.
Hayes discussed the second factor - the resilience of the U.S. regional banking sector. Since the March 2023 plunge, the U.S. government extended help through the Bank Term Funding Program (BTFP) slated to end soon. Hayes believes this will happen despite the persistent financial troubles in banks. However, next moves from Treasury Secretary Janet Yellen could dictate the outcome concerning liquidity issues and others.
According to his blog, the only thing that takes precedence over battling inflation is the occurrence of a financial calamity. Therefore, to secure the cuts, QT taper and speculated QE restart expected in March, the market first requires some banks to collapse when the BTFP expires.
As for Bitcoin, ominous signs of hardship due to turbulence around liquidity, the BTFP, and geopolitical hazards could indicate that the recent 20% BTC price decrease is merely the start.
Hayes foresees a "30% reduction from the ETF approval high of $48,000 is $33,600," meaning Bitcoin will likely establish support from $30,000 to $35,000 - this prompted him to acquire 29 March 2024 $35,000 strike puts. Hence, BTC-valuations below $35,000 now present a chance for a buy-the-dip strategy.
On January 23, BTC/USD reached the lowest point since early December on Bitstamp at $38,500, before recovering by approximately $1,700.
Note: This report does not offer investment counsel or suggestions. Every investment and market movement carry certain risks, and a comprehensive analysis is recommended before making any decisions.
Published At
1/24/2024 11:27:52 AM
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