Key Insights
- Former CEO of BitMEX expects bitcoin to rally back to $60,000 and then range between $60,000-$70,000 until August.
- He cites improving liquidity conditions from U.S. monetary and fiscal policies as factors that will dampen negative price movements
- Hayes predicts authorities will effectively guarantee all $6.7 trillion of uninsured deposits, requiring Fed money printing
LONDON (MarketsXplora) – Bitcoin is likely to bounce back to $60,000 before ranging between $60,000 and $70,000 until August, according to Arthur Hayes, the former CEO of crypto derivatives platform BitMEX who now runs a family office.
In a blog post on Friday, Hayes said improving liquidity conditions from recent U.S. monetary and fiscal policy actions would support crypto prices after this month’s sell-off and dampen negative moves.
“The slow addition of billions of dollars of liquidity each month will dampen negative price movements going forward, reversing the common sentiment on the seasonality of markets by suggesting ‘buy in May, go away’,” Hayes wrote.
Bitcoin plunged to a low around $56,500 on Wednesday, down 23% from its mid-March record high above $73,800. It was last trading at $59,568, according to cryptocurrency pricing data.
Read also! Bitcoin at Risk of Retesting $50,000, Says Standard Chartered
Hayes argued that measures such as the Federal Reserve’s move to slow its quantitative tightening pace, as well as the U.S. Treasury’s plans to increase debt issuance while draining cash buffers, were “stealth forms of money printing”.
He expects the crypto market will eventually latch onto these liquidity-boosting policies, driving prices higher after an initial period of consolidation.
“U.S. tax season, consternation over what the Fed will do, the Bitcoin halving sell the news event and a slowdown of U.S. Bitcoin ETF asset under management (AUM) growth coalesced over the prior fortnight to produce a well-needed market cleansing,” Hayes said of the recent rout.
Hayes also pointed to the forced acquisition of Republic First Bank by Fulton Bank last month, where the Federal Deposit Insurance Corporation (FDIC) provided $667 million to cover all depositors, as a sign of creeping moral hazard in the banking system.
Ahead of U.S. elections in 2024, Hayes said he expects the authorities to effectively guarantee all $6.7 trillion of uninsured deposits, requiring the Federal Reserve to print money to fund the FDIC’s insurance shortfall.
“This leads to money printing because the FDIC’s insurance fund doesn’t have $6.7 trillion,” Hayes said. “Once the fund is exhausted, the FDIC will borrow money from the Fed, which will print money to satisfy the loan.”
Despite the recent sharp sell-off in crypto markets, most digital assets are still up for the year so far thanks to hopes around growing adoption of bitcoin and increasing shift into crypto by institutional investors.
Bitcoin is up around 25% year-to-date, while the crypto market cap has grown to around $1.2 trillion from $800 billion at the start of 2023.
Meet Samson Ononeme, a dynamic writer, editor, and CEO of marketsxplora.com. With a passion for words and a sharp business acumen, he captivates readers with captivating storytelling and delivers insightful market analysis.