BitMEX Co-Founder Arthur Hayes has foreseen a substantial correction in Bitcoin’s price, projecting a decline ranging between 20% to 30% by early March.
In a comprehensive post, Hayes expressed his perspective, cautioning traders amidst the ongoing cryptocurrency bull market. He envisions a potentially harsh correction in March, preparing for what he describes as a “vicious washout” that could impact crypto investors perceived as “tourists” in the market.
Arthur Hayes articulated:
“I expect Bitcoin to experience a healthy 20% to 30% correction from whatever level it has attained by early March. The washout could be even more severe if the slate of US-listed spot Bitcoin ETFs has already commenced trading.”
The seasoned professional in the crypto industry further suggested that if the anticipation of significant fiat inflows into Bitcoin ETFs pushes the cryptocurrency’s price above $60,000 and close to its 2021 all-time high of $70,000, Bitcoin could potentially witness a correction of 30% to 40%.
Hayes outlined three pivotal factors converging in March that could impact the cryptocurrency market:
1. Reverse Repo Program (RRP) Balance Decline: Hayes underscored the significance of monitoring the RRP balance, indicating that nearing zero could signal a market downturn. He associated the decline in RRP balance with liquidity injection and the necessity for alternative sources to sustain market momentum.
2. Bank Term Funding Program (BTFP) Renewal: The decision on whether to renew the BTFP on March 12th becomes critical, carrying implications for banks seeking cash to exchange with U.S. Treasuries. Hayes speculated a potential non-renewal, citing the upcoming election year as a contributing factor.
3. Federal Reserve Rate Cut: The Federal Reserve’s meeting on March 20th might witness its first rate cut since 2021. Hayes analyzed the interconnectedness of these variables, suggesting that the sequence of events would shape the market’s perception of future dollar liquidity from the Fed and the U.S. Treasury.
Arthur Hayes Expects Things to Back on Schedule By March End
Hayes observed that these variables are interlinked, and the order in which they unfold is crucial in molding the market’s perception. He stressed the importance of assigning probabilities to various scenarios and preparing for potential market reactions.
The co-founder concluded by detailing his strategic trading moves, which encompass the possible utilization of Bitcoin puts as a safeguard against the anticipated correction. Hayes advised exercising caution and minimizing additional risks during this period, given the uncertainties associated with the identified decision points in March.
While acknowledging the likelihood of a correction, the BitMEX co-founder maintains a bullish long-term outlook, expressing the expectation that things will return to normalcy by late March.
