Arthur Hayes Says Bitcoin Has Bottomed: When Will $70,000 Be Reclaimed?

CEO of BitMEX, Arthur Hayes has a long history within the cryptocurrency industry. Hayes graduated from the Wharton School of Business at the University of Pennsylvania. He began working as an equity derivatives trader in 2008. In 2014, he founded BitMEX, the leading cryptocurrency derivatives platform. 

Hayes posted on the BitMEX blog to discuss the current state of Bitcoin and where he sees the price going in the future. In particular, he focuses on the Federal Reserve and Republic First Bank.

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The Federal Open Market Committee (FOMC) recently announced that they would be lowering the rate of quantitative tightening (QT) from $95 billion a month to $60 million a month. This means that they will be selling fewer financial instruments on the open market each month. Through this, they can lower the interest rates and provide some stimulus to the economy. 

Hayes goes on to note that in previous months, the FOMC has undershot the $95 billion QT quota, so there is potential for them to undershoot the $60 billion quota. According to Hayes, this is positive for U.S. Dollar liquidity and, in turn, Bitcoin.

Another potential positive for Bitcoin is the collapse of First Republic Bank. The Fulton Bank purchased it in late April 2024, and the FDIC approved it as "the least costly resolution for the DIF." Essentially, the acquisition was the outcome that allowed the FDIC to spend the least amount of money on deposit insurance. 

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However, as Hayes points out, the FDIC covered more deposits than was required by law. The FDIC only insures deposits up to $250,000. However, with the First Republic, the FDIC gave Fulton Bank the necessary cash to fully insure all depository accounts. According to Hayes, allowing any deposits to go uninsured "is politically unpalatable in an election year, especially if the powers that be have continuously assured the public the banking system is sound." So, the move essentially set a precedent for fully insuring deposits.

If more banks fail, this precedent would inevitably lead to more money printing, as the FDIC would have to borrow from the Fed to satisfy all deposits. To some, this could be seen as reckless, giving more value to Bitcoin's consistent and predictable supply. 

To end the post, Hayes summarizes his position in three points:

1. Bitcoin hit a low at $58,600.
2. Bitcoin will be rangebound between $60,000 and $70,000 until August
3. The Fed and FDIC are stealthily printing money, giving more validity to Bitcoin

So, with some evidence from macro policy and recent events in the banking sphere, Hayes believes that there is room for Bitcoin to go up in the coming months as the effects of recent moves begin to realize. 

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