Arthur Hayes, an American investor and co-founder of the cryptocurrency exchange BitMEX, has again expressed his views on how Bitcoin (BTC) might behave before and after the upcoming halving event, predicted to take place between April 16 and 20 this year.
The ex-CEO of BitMEX wrote in his recent blog named “Heatwave,” anticipating tough times for the primary cryptocurrency following the halving event. This event, widely viewed as a catalyst for bullish market rallies in the crypto industry, is expected to deal a twofold challenge instead.
A Bag of Tricks
Hayes explained that the expected decline in Bitcoin’s value will be triggered by various tactics he likened to a “bag of tricks” employed by the United States Federal Reserve and the Department of Treasury. He suggested that these governmental maneuvers might prompt investors to hastily sell off their digital asset holdings, leading to a prolonged negative impact on the market.
Hayes admitted that the short-term impact of the halving event on cryptocurrencies might be positive. However, he warned that there’s a possibility the market may shift to a downturn in the future.
The common assumption that bitcoin price surges follow each halving event may be widely accepted. Yet, a word of warning: When most investors expect a specific result, the reverse often occurs in reality.
“The belief that Bitcoin’s halving leads to price increases is widely accepted. However, it’s important to note that when the majority of traders anticipate a specific result, the opposite often happens instead,” he pointed out.
US Dollar Liquidity to Influence Bitcoin Price
Hayes also mentioned another factor that could play a role in the anticipated decline of Bitcoin (BTC) before and after the halving: dollar liquidity constraints. The co-founder and former CEO of BitMEX believes that the upcoming halving event coincides with a period of heightened US dollar liquidity. He suggests that this increased liquidity could lead to greater selling pressure on digital assets, ultimately resulting in a market depreciation.
Despite this, Hayes expects that after May 1st, the quantitative tightening (QT) process will ease up and resume a regular pace, aligning with US inflation movements once again.
In his blog post, Hayes warned that the last weeks of April could be a risky time for investments due to several reasons. He pointed out that US tax payments during this period can decrease the amount of available funds in the market. Additionally, the Federal Reserve starting quantitative tightening aimed to shrink the money supply. Furthermore, the Treasury’s General Account remained unused, potentially adding more uncertainty.
Hayes Could Be Wrong About Bitcoin
Although Hayes anticipates a unfavorable result for Bitcoin and cryptocurrencies in general, he admitted there’s a possibility of being mistaken.
“Is it possible that the market goes against my pessimistic viewpoint and rises further? Absolutely. Since I’m always invested in crypto, I’m eager to be proved wrong.”
Bitcoin has surprised pundits on numerous occasions with its unpredictable behavior, not adhering to any set guidelines. Recently, it reached a record-breaking price of $73,000 for the first time since its creation in late 2008, bouncing back from a significant dip that took it down to $16,000 during the market slump in November 2022.
Based on information from CoinMarketCap, the value of the digital asset is approximately $70,737 at present, marking a 6.34% rise over the past week.
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2024-04-09 14:01