Arthur Hayes bets on Bitcoin, altcoin to rise in H1 2023 as he buys BTC
Bitcoin (BTC), Ether (ETH) and even nascent altcoins are a solid “buy,” says one former venture capitalist.
In a blog post published on February 8, industry stalwart Arthur Hayes announced a U-turn on his current crypto investment plans.
Hayes changes tune on ‘risky assets’
Current macroeconomic conditions stemming from the US Federal Reserve previously made Arthur Hayes keen to avoid what he calls “risky assets”.
As inflation slows and the Fed rate hikes with them, more new storms are brewing in the US, and the Fed, as well as Congress and the Treasury Department, will all manage the economy as they see fit, he says.
The problem is guessing how these events will play out over the course of the year. For Hayes, 2023 could well be split into two halves, with H1 being an ideal investment environment for crypto.
This contradicts an earlier thesis from mid-January, where the former BitMEX chief said he was staying on the sidelines for fear of a Fed-induced capitulation event hitting risk assets.
“My concerns about this potential outcome, which I would most likely happen later in 2023, have led me to keep my reserve capital in money market funds and short-dated US Treasuries,” he explained now.
“As such, the portion of my liquid capital that I intend to eventually use to buy crypto is missing out on the current monster rally we are seeing due to the local lows. Bitcoin is up close to 50% from the lows of $16,000 we saw around The FTX fallout.”
Hayes continued that Bitcoin is likely far from done with its decline despite 40% gains in January alone, comparing the risky asset environment to 2009 and the start of quantitative easing (QE).
This year, the picture is complex – QE has given way to quantitative easing (QT), where liquidity is removed from the US financial system at the expense of risk assets.
However, H1 appears to provide some relief – until Congress votes to raise the debt ceiling in the summer, which Hayes and others argue is inevitable, some liquidity will actually return to avoid hitting the debt ceiling prematurely.
Cash in the Treasury General Account (TGA) will be depleted by $500 billion, canceling the $100 billion monthly in liquidity that the Fed removes.
“The TGA will be exhausted sometime in the middle of the year. “Immediately after the exhaustion, there will be a political circus in the US around raising the debt limit,” the blog post warned.
“Given that the Western-led fiat financial system would collapse overnight if the US government decided to forego raising the debt ceiling and instead default on the assets that underpin said system, it’s safe to assume that the debt ceiling will be raised.”
Looking for macro “winding up”
That’s when the tide will turn, and risky assets can become a thorn in the side of every investor again.
Related: BTC Price Calculation That Signaled Biggest Bitcoin Bull Runs Breaks Out at $23K
It’s all a matter of timing, Hayes believes. His plan is to move into US dollar cash, where it is possible to enter select risk assets. Top of the menu, it seems, is Bitcoin.
“I will be distributing in the coming days. I wish my size actually mattered, but it doesn’t – so please don’t think that when this happens, it will have any noticeable effect on the price of the orange coin , he told readers.
Going forward, however, altcoins represent a great opportunity, the blog post explains in its conclusion, with these also dependent on timing.
“The key to shitcoining is to understand that they go up and down in waves. First, the crypto reserve – that is, Bitcoin and Ether – increases. The rally in these stalwarts eventually stops, and then the prices fall a bit,” Hayes wrote about crypto market cycles.
“At the same time, the shitcoin complex stages an aggressive rally. Then the shitcoins rediscover gravity, and interest shifts back to Bitcoin and Ether. And this cascading process continues until the secular bull market ends.”
So far this year, the total market capitalization of crypto has increased by about 34%, data from Cointelegraph Markets Pro and TradingView shows.
Governing the process in 2023 is therefore the “unwinding” of the short window of more accommodative economic conditions currently manifesting in the US
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