Bitcoin bottomed out as “everyone who could go bankrupt has gone bankrupt”
Arthur Hayes, the former CEO of crypto derivatives platform BitMEX, believes the worst may be over for Bitcoin (BTC) this cycle as the “biggest most irresponsible entities” have run out of BTC to sell.
“Looking forward, pretty much everyone who can go bankrupt has gone bankrupt,” he said in a Dec. 11 interview with crypto attorney and podcaster Scott Melker.
Hayes elaborates on his stance by explaining that when centralized lending firms (CELs) have financial problems, they will often call in loans first, and then sell BTC first because it serves as the “reserve asset of crypto” and “the most pristine asset and most liquid: “
“When you look at the balance sheet of some of these heroes, there’s no Bitcoin on it, because what are they doing, they sold Bitcoin when they went bankrupt, they sold Bitcoin during the wave before they went bankrupt.”
Hayes voiced a similar argument in a December 10 blog post, explaining that while this “credit crunch is ongoing,” large physical sales of BTC are taking place on exchanges from both CELs trying to avoid bankruptcy and trading firms that have had their loans revoked and must liquidate their positions.
Let’s try this again.
In “PEMDAS” I argue for it $BTC have the bottom, and then talk about what type #crypto‘s I’ll hold while I wait for the cash register to go brrr again. pic.twitter.com/IV4Td1UTda
— Arthur Hayes (@CryptoHayes) 9 December 2022
“This is why the price of Bitcoin is staggering before CEL’s bankruptcy. That’s the big move,” he said:
“I can’t demonstratively prove that all the Bitcoin held by these failed institutions was sold during the many crashes, but it looks like they tried their best to liquidate the most liquid crypto-security they could right before they went under.”
However, Hayes believes that the big liquidations are over, explaining in the blog post that “There is no reason why you would hold on if you had an urgent need for fiat.”
Related: Hong Kong could be key to China’s crypto comeback – Arthur Hayes
Following the collapse of crypto exchange FTX and the subsequent fallout, the market is still deep in the grip of crypto winter, but Hayes believes the market could see some recovery in 2023.
“I think the US financial market will become dysfunctional at some point in 2023 because of the Fed’s monetary policy tightening,” he said, adding: “At that point, I expect the Fed to turn on the printing press, and then boom shaka-laka — Bitcoin and all other risk assets will rise higher.”
