Billionaire Arthur Hayes analyzes the state of the crypto markets, says several major players have no more Bitcoin to sell
BitMEX founder Arthur Hayes looks at the possibility that Bitcoin may have already bottomed out in the bear market, saying that three key players have likely run out of BTC to sell.
In a new blog post, the crypto veteran identifies three groups of investors who were forced to part with their Bitcoin stakes this year due to abuse of leverage: centralized lending and trading firms, Bitcoin miners, and regular speculators.
Looking at centralized firms first, Hayes says these institutions likely unloaded most of their BTC following the collapse of crypto hedge fund Three Arrows Capital (3AC) and Sam Bankman-Fried’s trading firm Alameda Research.
“When these two companies [Alameda and 3AC] got into trouble, what did we see? We saw large transfers of the most liquid cryptos – Bitcoin (WBTC in DeFi) and Ether (WETH in DeFi) – to centralized and decentralized exchanges which were then sold. This happened during the Great Depression…
I can’t demonstratively prove that all the Bitcoin held by these failed institutions was sold during the multiple crashes, but it looks like they tried their best to liquidate the most liquid crypto security they could right before they went under.
The [centralized lending firms] and all major trading firms have already sold most of the Bitcoin. All that’s left now are illiquid s**coins, private stakes in crypto companies and locked tokens before sales.”
As for Bitcoin miners, Hayes says they have net sold their BTC since the first credit crunch in June when the royal crypt fell below $20,000 for the first time in over 18 months.
“They have to do this in an effort to keep up with their huge fiat debt loads. And if they don’t have debt, they still have to pay utility bills – and since the price of Bitcoin is so low, they have to sell even more of it for to keep the facility operational.”
As for regular speculators, Hayes says he looks at the amount of open interest (OI) on long and short contracts to gauge the level of speculation in the markets. According to him, the all-time high in OI coincided with the all-time high for BTC. OI also plunged as the market fell, suggesting that speculators were wiped out.
“Taking a look at the sum of OI across all major crypto derivatives centralized exchanges, we can see that OI’s local low also coincided with Bitcoin’s sub-$16,000 spike on Monday, November 14. Now OI is back to levels that has not been seen since early 2021.
The timing and magnitude of the OI reduction leads me to believe that most of the overleveraged long positions have been wiped out.”
Hayes concludes by saying that he is not 100% sure if Bitcoin’s current bear market around $15,900 is the absolute bottom, but he says that BTC jumped from that level due to “the stop of forced selling caused by a credit crunch.” He also notes that everything is cyclical.
“What goes down will go up again.”
At the time of writing, Bitcoin is changing hands for $17,170.
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Featured image: Shutterstock/kersonyanovicha/David Sandron
