BitMEX co-founder Arthur Hayes on Friday said that Bitcoin BTC/USD has likely hit a local bottom and is poised for a comeback despite the recent price drop to around $58,000 levels.
What Happened: In his latest blog post, Hayes expressed concerns about the implications of recent U.S. financial policies, stating, “Did Bitcoin hit a local low at around $58,600 earlier this week? Yes.”
He predicts a rally to above $60,000 and then “range-bound price action between $60,000 and $70,000 until August.”
Hayes attributes this volatility to a series of macroeconomic triggers including U.S. tax season pressures, speculation about Federal Reserve actions, and broader market reactions to regulatory news.
Highlighting the role of U.S. Treasury and Federal Reserve policies, Hayes points out that changes in quantitative tightening and interest payments could significantly influence liquidity in the financial system.
He notes, “Reducing the pace of asset runoff from the Fed's balance in accordance with their quantitative tightening (QT) program sounds benign. But make no mistake — by reducing the rate of QT from $95 billion to $60 billion per month, the Fed is essentially adding $35 billion per month of dollar liquidity.”
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The financial instability highlighted by the recent failure of small banks, such as Republic First Bank, and the responses to these events have stirred significant discussions about the security of digital assets.
The FDIC’s intervention to insure all deposits following the bank’s failure has been critiqued by Hayes as a form of stealth money printing that could have long-term inflationary impacts.
These developments come at a crucial time when the cryptocurrency community is looking towards future regulations and innovations in digital asset security.
What’s Next: This topic is set to be a major discussion point at the upcoming Benzinga’s Future of Digital Assets event on Nov. 19, where industry leaders will explore the implications of recent economic policies on cryptocurrencies and discuss strategies to enhance digital asset security and investor confidence in this volatile market.
Read Next: Spot Bitcoin ETFs See $34M Net Outflow On Thursday
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