Ex-BitMEX CEO Arthur Hayes Foresees 30-40% Bitcoin Price Drop in March Due to Market Turmoil
Summary:
Arthur Hayes, a veteran Bitcoin trader and former CEO of BitMEX, forecasts a potential 30-40% BTC price drop in March, attributing it to turmoil in financial markets. Despite expectations of a landmark year for BTC due to the potential U.S. ETFs approval and the block subsidy halving in April, Hayes believes the path upwards will face volatility. He cites the U.S. Federal Reserve's monetary actions, particularly the conclusion of the Bank Term Funding Program (BTFP) and the subsequent interest rate decision by the Federal Open Market Committee (FOMC) as triggering market instability. Hayes asserts that while Bitcoin could initially decline, it would likely rebound quickly, anticipating the Fed's likely response to market turmoil.
Bitcoin (BTC) veteran trader Arthur Hayes has forecasted a potential 40% price drop for BTC in March. On January 4, in his blog, the ex-CEO of BitMEX, stated financial markets could experience some disruption. He predicts that despite bullish sentiments due to the U.S.'s first potential spot exchange-traded funds (ETFs) getting regulatory approval, Bitcoin might face a steep correction in the range of 30-40%.
Even though the upcoming block subsidy halving in April along with wider adoption and institutional investment could be a significant turning point for BTC's price growth, Hayes warns that the path upwards will not be linear. His prediction revolves around actions of the U.S. Federal Reserve to manage an economy faced with instability but curbing inflation.
In March, the Federal Reserve’s Bank Term Funding Program (BTFP), established in response to the regional banking crisis last year, will conclude. The subsequent week, the Federal Open Market Committee (FOMC) is obligated to decide about increasing, maintaining or reducing interest rates.
Hayes mentions, "The BTFP concludes on March 12th, followed by the Fed rate decision announcement on March 20th. There are six trading days amidst these crucial decision points.” He hypothesizes that the market might cause some banks to go bankrupt within this period, pushing the Fed into lowering rates and reintroducing the BTFP.
As Bitcoin and other cryptocurrencies are highly reactive to macro liquidity changes, a bailout by the Fed could bolster their value, but not before an initial shock induced by a repetition of the volatility witnessed in 2023.
Hayes posits, "Bitcoin might experience a sharp decline in line with the wider financial markets initially, but will bounce back prior to the Fed meeting." Highlighting Bitcoin's global acceptance and independence from the banking system's liabilities, Hayes anticipates that Bitcoin will accurately predict and respond to the Fed's stimulus package when the market worsens.
Elaborating on Bitcoin's ability to anticipate monetary printing, Hayes concludes, "Bitcoin knows money created is always money created," and that it could "surge prior to the Fed's decision to restart the money printers.” He expects that the extent of the drop is between 20% and 30% from the level at which BTC/USD trades at the beginning of March. HALVING will then act as the primary catalyst for upward movement.
Towards the anticipation of ETF approval, BTC price has been witnessing its own volatility. Despite a near 10% drop this week, owing to concerns of rejection, experts remain divided regarding the ETF's potential impact. Some argue that even if the ETFs are approved, Bitcoin might be due for a more significant correction. On the other hand, John Bollinger, creator of the Bollinger Bands volatility indicator, forecasts a positive reaction based on his tool’s readings.
This post does not contain any professional investment advice or recommendations. All trading and investment moves carry inherent risks, and it's on the reader to research thoroughly before making any decisions.
Published At
1/5/2024 12:56:45 PM
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