Former Bitmex CEO Arthur Hayes has issued a cautionary statement regarding a possible 30% correction in the bitcoin market. In a recent Medium post, Hayes also discussed the impact of spot bitcoin exchange-traded funds (ETFs) on the price of bitcoin. With the U.S. Securities and Exchange Commission (SEC) expected to approve multiple spot bitcoin ETFs soon, Hayes believes that the market could experience an even more severe correction.
Hayes' Bitcoin Price Forecast
In his Medium post, Hayes outlined his bitcoin price forecast, anticipating a healthy 20% to 30% correction in the early part of March. He also stated that if the slate of U.S.-listed spot bitcoin ETFs has already begun trading, the correction could be even more significant. Hayes emphasized the potential for a dollar liquidity rug pull, which could result in a 30% to 40% correction in the bitcoin market.
Factors Influencing the Correction
Hayes identified three key variables that he expects to "collide with each other in March." Firstly, he highlighted the Fed's Reverse Repurchase Operations (RRPs) or reverse repo, predicting that the RRP balance will reach $200 billion early in March. He stated that there needs to be another source of dollar liquidity supplied to sustain the market's momentum.
Secondly, Hayes mentioned the need for banks to find cash to swap with U.S. Treasuries and other eligible bonds they repo'd with the Fed by March 12. This requirement could impact the liquidity of the market. Lastly, he discussed the possibility of the Fed initiating its first rate cut since March 2021 at the Federal Open Market Committee (FOMC) meeting on March 20. This potential rate cut could further impact the market.
Spot Bitcoin ETFs
Hayes also addressed the potential impact of spot bitcoin ETFs on the market. He highlighted the anticipation of significant fiat inflows into these ETFs, which could drive bitcoin's price above $60,000 and close to its 2021 all-time high of $70,000. However, he warned that this could lead to a 30% to 40% correction due to a potential dollar liquidity rug pull.
Currently, there are 11 spot bitcoin ETF proposals filed with the SEC, and trading could begin as early as January 11. Hayes emphasized the need for bitcoin derivatives as a liquid macro crypto hedge, given the liquidity challenges associated with other cryptocurrencies.
In conclusion, former Bitmex CEO Arthur Hayes is cautioning about a potential 30% correction in the bitcoin market. He believes that the correction could be even more severe if the slate of U.S.-listed spot bitcoin ETFs has already commenced trading. As the market awaits the SEC's decision on these ETFs, it remains to be seen how these factors will influence the price of bitcoin and the overall cryptocurrency market.
What are your thoughts on Hayes' predictions? Share your opinions in the comments section below.
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- Gold IRA: Add some sparkle to your retirement nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
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By: Kevin Helms
Title: Former Bitmex CEO Arthur Hayes Warns of Potential 30% Bitcoin Market Correction
Sourced From: news.bitcoin.com/former-bitmex-chief-predicts-30-btc-correction-warns-spot-bitcoin-etfs-could-make-it-worse/
Published Date: Mon, 08 Jan 2024 02:30:37 +0000