Arthur Hayes Says Crypto Assets Face A “Raging Firesale” Around The Bitcoin Halving As Fed Uses “Bag of Tricks” To Bail Out Banks

On Apr 9, 2024

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BitMEX co-founder Arthur Hayes said Bitcoin and crypto prices may slump around the time of the Bitcoin halving as US policymakers use a “bag of tricks” to bail out the financial system.

The halving on Apr. 20 will also coincide with a period of tight dollar liquidity with tax payments due from April 15 to May 1, he said in a blog post.

“Given that the halving occurs at a time when dollar liquidity is tighter than usual, it will add propellant to a raging firesale of crypto assets,” he said. “April will experience extreme weakness in risky asset markets.”

“Heatwave” is an essay on why I’m bearish despite the recent move higher in #crypto markets.https://t.co/gZ8Vl1uC04 pic.twitter.com/fH6docB499
— Arthur Hayes (@CryptoHayes) April 9, 2024

Bitcoin is back to trading above $70K as the market anticipates the halving, which is less than two weeks away. The Bitcoin Fear & Greed Index is at 80, showing “extreme greed.”

Hayes said the narrative of the Bitcoin halving being a bullish catalyst is “well-entrenched,” but added that past trends show that when the market expects a certain outcome, the opposite tends to happen.

Fed Policies Will Drive Long-Term Gains

The Federal Reserve is surreptitiously printing money “in order to bail out the financial system” and that could trigger gains for cryptocurrencies, gold, and stocks in the long run, Hayes said.

While some policies are slowing down liquidity in the short term and causing a bleed in risk assets, in the long term the printing of money will be a catalyst that boosts crypto prices, he said.

Hayes said he had decided to abstain from trading until May, when he anticipates the crypto bull market will resume.

“I hope to return in May with dry powder ready to deploy to position myself for the bull market to begin in earnest,” he said.