Popular Analyst: “Bitcoin Is Far From Dead Despite 40% Growth in January”

If you ask Arthur Hayes, Bitcoin, Ethereum and the rest of the market are far from done rising. The former CEO and co-founder of the BitMEX derivatives platform writes on his popular blog that he is optimistic about the market for the first half of 2023. Earlier this year, he decided to put some of his capital on the sidelines, but has now significantly changed his mind.

Rotated 180 degrees

In the first weeks of 2023, Hayes still feared a so-called ‘surrender’ from the US Federal Reserve. You may have noticed that the US Federal Reserve has raised US interest rates significantly in 2022 to fight inflation. Hayes believed that this could seriously damage the economy and that the Federal Reserve should refrain from doing so in the short term.

This change of course would mean that interest rates would have to fall again quickly to help the economy slide into recession. This is usually a scenario where risky assets like bitcoin don’t do very well. Now Hayes suddenly has a completely different view. “My concerns about this possible outcome […] caused me to keep part of my capital on the sidelines,” said the analyst.

“As a result, some of my assets, which I used to buy at lower prices, are now missing the monster rally we saw from the local lows. Bitcoin is already up nearly 50% from the $16,000 bottom,” Hayes continues.

Not over yet

Hayes goes on to write that despite the nearly 40% price gain in January, Bitcoin is far from done with its resurgence. The analyst compares the current situation to that of 2009, when we were in the midst of a global financial crisis that forced the US Federal Reserve to significantly stimulate the economy with lower interest rates and the purchase of various financial assets.

According to Hayes, the first half of 2023 could be characterized by price increases until the US Congress decides to raise the debt ceiling. America is approaching its debt ceiling, which means it must now provide liquidity to the market through certain reserves. Once the debt ceiling goes up, that liquidity supply is likely to run out and the market could get tough again.

Hayes expects the cash reserves on the General Treasury Account (TGA) of approximately $500 billion to be fully utilized. This partially offsets the effect of the Federal Reserve’s tight policy. “The TGA will be used in mid-2023. Immediately after that, I expect a political circus around raising the US debt ceiling,” said Hayes.

“Since the Western financial system would collapse if the US government decided not to raise the debt ceiling, it is safe to assume that the debt ceiling will eventually rise,” the analyst continued.

back to dollars

For this reason, Hayes plans to sell its risky assets again in mid-2023 to hide in the relative safety of the US dollar. According to the analyst, it is all a matter of timing. Hayes’ top choice for his current investments appears to be bitcoin.

“In the coming days I will start investing. I wish my capital mattered, but it doesn’t matter. So don’t think my investments will have any impact on the price of Bitcoin,” Hayes tells his readers. Once the Bitcoin rally starts to fall, Hayes expects another aggressive rally in altcoins before returning to the US dollar.

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