Bitcoin (BTC), Ether (ETH) and even nascent altcoins are a solid “buy,” a previously risk-off investor says.
In a blog post released on Feb. 8, industry stalwart Arthur Hayes announced a u-turn on his current crypto investment plans.
Hayes changes tune on “risky assets”
Current macroeconomic conditions stemming from the United States Federal Reserve previously made Arthur Hayes keen to avoid what he calls “risky assets.”
As inflation slows in tandem with the Fed’s rate hikes, multiple new storms are brewing in the U.S., and the Fed, Congress and the Treasury will steer the economy as they see fit, he says.
The problem is guessing how these events will play out over the course of the year. For Hayes, 2023 could well be split into two halves, with H1 being an ideal investment environment for crypto.
This runs contrary to a previous thesis from mid-January, in which the former BitMEX CEO said that he was staying on the sidelines for fear of a Fed-induced capitulation event hitting risk assets.
“My concerns about this potential outcome, which I handicapped would most likely happen later in 2023, has led me to keep my spare capital in money market funds and short-dated U.S. Treasury bills,” he explained.
“As such, the portion of my liquid capital that I intend to eventually use to purchase crypto is missing out on the current monster rally we’re seeing off of the local lows. Bitcoin has rallied close to 50% from the $16,000 lows we saw around the FTX fallout.”
Hayes continued that Bitcoin is likely far from done with its rebound despite 40% gains in January alone, comparing the risk asset environment to 2009 and the start of quantitative easing.
S&P 500 (SPX) annotated chart (screenshot). Source: Arthur Hayes/ Medium
This year, the picture is complex — quantitative easing has given way to quantitative tightening, where liquidity is removed from the U.S. financial system at risk assets’ expense.
However, H1 looks to be providing some relief, with some liquidity returning to avoid hitting the debt ceiling too soon. This could continue until Congress votes to raise the debt ceiling in the summer,…