Bitcoin (BTC) trading OG Arthur Hayes now predicts an up to 40% BTC price crash in March.
In a blog post on Jan. 4, the former CEO of crypto trading giant BitMEX warned readers of a week of turmoil due to hit financial markets.
Hayes on BTC price: “I could easily see a 30% to 40% correction”
Bitcoin bulls are feeling broadly confident this year as the United States’ first spot Bitcoin exchange-traded funds (ETFs) are slated to get regulatory approval.
Combined with the block subsidy halving in April, the events constitute what could be a landmark year for BTC price expansion thanks to institutional money and wider adoption.
That said, for Hayes, all is not destined to go up in a straight line. The reason, he says, lies with the U.S. Federal Reserve and its attempts to steady an economy that is cutting inflation but saddled with instability.
In particular, March will see the Fed’s Bank Term Funding Program (BTFP) — a facility set up in response to the 2023 regional banking crisis — come to an end. One week later, the Federal Open Market Committee (FOMC) must decide whether to hike, hold or lower interest rates.
“The BTFP expires on March 12th, and the Fed rate decision is announced on March 20th. There are six trading days between these two crucial decision points,” Hayes noted.
“If my forecast is correct, the market will bankrupt a few banks within that period, forcing the Fed into cutting rates and announcing the resumption of the BTFP.”
Bitcoin and crypto are highly sensitive to changes in macro liquidity, and a Fed bailout would certainly help their cause — but only after an initial shock caused by a rerun of the 2023 volatility.
“Bitcoin initially will decline sharply with the broader financial markets but will rebound before the Fed meeting. That is because Bitcoin is the only neutral reserve hard currency that is not a liability of the banking system and is traded globally,” Hayes continued.
“Bitcoin knows that the Fed ALWAYS responds with a liquidity injection when things get bad.”
He added that Bitcoin “knows printed money in whatever guise is always printed money,” and that…
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