Arthur Hayes, cryptocurrency billionaire and co-founder of BitMEX, shared his thoughts on current US economic policies and their impact on Bitcoin. Hayes’ analysis, based on his market experience and observation of macroeconomic trends, focuses on a scenario of looming challenges for Bitcoin amid economic changes.
In his lengthy article, Hayes highlights the dynamic and somewhat confusing relationship between the actions and statements of US Treasury Secretary Janet Yellen and Federal Reserve (Fed) Chair Jerome Powell. According to him, this dynamic has a direct impact on the financial market, especially on the behavior of Bitcoin.
In November 2023, Yellen announced a change in US government bond policy, which would favor government bonds (T-bills), which mature in less than a year. This strategy, as explained by Hayes in his essay “Bad Gurl,” resulted in an injection of liquidity into the financial market, which was valued at nearly $1 trillion upon completion.
On the other hand, in December 2023, Powell signaled the possibility of rate cuts in 2024, a dramatic departure from his previous stance of maintaining tight policies to keep inflation under control. Hayes interprets these actions and statements as crucial factors that have influenced the markets, including Bitcoin.
Bitcoin could fall to $30,000
First of all, it’s important to note that Hayes predicted a decline in Bitcoin when ETFs were launched in the United States, which ultimately happened. In his latest analysis, the billionaire points out that Bitcoin is sending out warning signals in anticipation of changes in economic policy.
Following the launch of Bitcoin ETFs in the US, the cryptocurrency saw a decline from a peak of $49,000 to below $40,000. Hayes sees this as Bitcoin’s first response to the policies of the Fed and the US Treasury Department.
Central to Hayes’ argument is the prediction that the Bank Term Financing Program (BTFP) will not be extended, which he believes will not be positive given that the Fed has not yet cut rates to a level that stimulates the economy.
He argues that until interest rates are cut, smaller banks will not be able to survive without government support from the BTFP.
Hayes extends his analysis to the geopolitical scenario, highlighting the influence of a new conflict in the Middle East and US foreign policy under the Biden administration. He associates these factors with economic volatility and the potential increase in inflation, which could affect Bitcoin’s price.
Regarding American domestic politics, Hayes comments on economic inequality among American citizens and how this could affect the upcoming presidential election.
He suggests that while part of the population is benefiting from current economic policies, a large majority is struggling with debt and the high cost of living.
Finally, Hayes predicts that Bitcoin could fall as much as $30,000 before monetary policy decisions in March.
“I think Bitcoin will find a bottom between $30,000 and $35,000”Hayes said in his article.
He argues that this stabilization will be preceded by a smaller financial crisis caused by the non-extension of the BTFP and the subsequent need for direct action from the Fed.
“I believe Bitcoin will fall before the BTFP extension decision on March 12. I didn’t expect it to happen so quickly, but I think Bitcoin is going to fall. While SPX and NDX fall apart due to a mini-financial crisis in March, Bitcoin will rise as it directs the eventual implementation of rate cuts and money printing talk on behalf of the Fed.”
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
