According to Arthur Hayes, co-founder of BitMEX, the upcoming Bitcoin halving combined with the actions of the Federal Reserve and Treasury will contribute to a significant decline in the cryptocurrency market for several weeks. In a recent blog post on April 8, Hayes expressed his belief that while the Bitcoin halving would eventually lead to price increases in the medium term, the immediate impact could be negative.
Hayes highlighted the prevailing narrative that the halving event would be beneficial for crypto prices but cautioned against such assumptions. He argued that when the majority of market participants anticipate a certain outcome, the opposite often occurs. Furthermore, Hayes noted that the halving coincides with a period of tighter dollar liquidity, and he outlined his theory on how the policies of the Federal Reserve and Treasury affect the markets.
Hayes also emphasized that the latter half of April would be a precarious period for risky assets due to factors such as U.S. tax payments reducing liquidity, the Federal Reserve initiating Quantitative Tightening, and the Treasury’s General Account remaining untapped. Following the Federal Reserve’s meeting on May 1, Hayes expects a reduction in the pace of money supply tightening and anticipates the release of approximately $1 trillion of liquidity into the system from the Treasury’s General Account, which would likely boost the markets.
While Hayes predicted a slump in Bitcoin and crypto prices around the time of the halving, he acknowledged the possibility of the market defying his bearish inclinations and continuing to rise. He also expressed that he is happy to be wrong, given his long positions in crypto assets.