According to Arthur Hayes, co-founder of BitMEX, the upcoming Bitcoin halving, combined with actions by the Federal Reserve and Treasury, will contribute to a significant drop in the cryptocurrency market for several weeks. In a recent blog post On April 8, Hayes expressed his belief that while the bitcoin halving would eventually lead to price increases in the medium term, the immediate impact could be negative.
Hayes highlighted the prevailing narrative that the halving event would be beneficial for cryptocurrency prices, but cautioned against such assumptions. He argued that when the majority of market participants anticipate a certain outcome, the opposite often occurs. Additionally, Hayes noted that the halving coincides with a period of increased dollar liquidity and outlined his theory on how Federal Reserve and Treasury policies affect markets.
Hayes also emphasized that the second half of April would be a precarious period for risk assets due to factors such as US tax payments reducing liquidity, the Federal Reserve beginning quantitative tightening and the Treasury General Account remaining untapped. Following the May 1 Federal Reserve meeting, Hayes expects a reduction in the pace of money supply adjustment and anticipates the release of approximately $1 trillion of liquidity into the system from the Treasury General Account, which will likely would boost markets.
While Hayes predicted a drop in Bitcoin and cryptocurrency prices at the time of the halving, he acknowledged the possibility of the market defying its bearish inclinations and continuing to rise. He also expressed that he is happy to be wrong, given his long positions in crypto assets.
