BitMEX Co-Founder Arthur Hayes Warns of Massive Crypto Correction Ahead of Sustained Bull Run
Arthur Hayes, co-founder and former CEO of crypto derivatives exchange BitMEX, has warned that he believes a massive cryptocurrency price correction is on the way, but noted that after it there could be a sustained bull run that he is “super bullish” about.
During an interview on the Crypto Banter show, Hayes said that the flagship cryptocurrency Bitcoin and other risky assets are likely to undergo a massive correction in the near future as a huge amount of liquidity leaves the market.
In a recent blog post, Hayes noted that the United States is expected to raise the debt ceiling this year and issue $1.1 to $1.2 trillion in government bonds to finance the USG Federal Deficit in 2023, which the Congressional Budget Office estimates will be around those numbers.
In his post, Hayes noted that as the Treasury sells off debt, the Federal Reserve remains committed to reducing its holdings of U.S. Treasuries by $100 billion per month, which he says poses a threat to risky assets as it drains the market of significant liquidity.
In his words, the flood of Treasury debt into the market, combined with the Federal Reserve’s mixed messages, has created an environment of uncertainty and caution for investors. Hayes advised his readers to monitor the market closely and be prepared to act quickly.
He said the Treasury General Account (TGA) is an important indicator to watch as it will signal when the government has fully drawn down its cash balance and is approaching the debt ceiling.
In his recent interview with Crypt Banter, Hayes said Bitcoin hasn’t really escaped its correlation with global risk assets, and he believes it’s due for a “correlation one” moment, meaning “everything goes down massively together, Bitcoin included .”
While the CEO of BitMEX acknowledged the potential for the cryptocurrency to breach the $20,000 mark, he believes a further decline is likely. Nevertheless, he remains optimistic about the long-term potential of Bitcoin, especially in light of the response of the monetary and financial authorities in times of economic distress.
He believes that in the event of another economic downturn, governments will inject money into the economy and print more currency, which could further drive up the value of Bitcoin. After that, Hayes says Bitcoin and Ethereum will maintain their upward momentum, before alternative cryptocurrencies go “vertical.”
This sector of the cryptocurrency industry is known for its volatile fluctuations, which can lead to both significant gains and losses for investors. To navigate this unpredictable terrain, the CEO stresses the importance of understanding its cyclical nature, as he says these assets tend to follow a pattern of “waves”, with BTC and ETH leading the charge before stopping. and giving way to an altcoin rally.
Eventually, these lesser-known cryptocurrencies also experience a correction, and the cycle begins again with renewed interest in Bitcoin and Ethereum.
