Arthur Hayes Predicts Bitcoin Drop Below $40,000 as US Treasury Announcement Looms
Bitcoin (BTC) put option purchased by BitMEX founder
Arthur Hayes, the founder of BitMEX, has announced that he has purchased a Bitcoin put option with a strike price of $35,000, expiring on March 29. In a post on the social media platform X, Hayes expressed his belief that Bitcoin is currently looking “heavy” and will likely drop below the $40,000 mark. He attributes this potential drop to the upcoming U.S. Treasury announcement at the end of the month, which will detail Treasury auctions and the new debt to be issued.
Bitcoin becomes uncorrelated to the S&P 500
Hayes further explains that Bitcoin has become uncorrelated to the S&P 500 to the downside. He suggests that the event at the end of this month may end up being bearish for Bitcoin, as both BTC and the S&P 500 have historically moved in tandem. Hayes questions which asset is right about the future and points to Bitcoin’s suggestion that there are hiccups ahead for liquidity. He highlights the importance of the January 31st U.S. Treasury refunding announcement as the next signpost for Bitcoin’s future.
March events could lead to market correction
Hayes previously stated that the end of the Bank Term Funding Program (BTFP) on March 12th would likely cause a sharp correction not only in Bitcoin but also in other risk assets. However, he suggests that this market correction could prompt the Federal Reserve to ease monetary policy, which could ultimately help Bitcoin recover its losses. Hayes highlights the significance of the Fed rate decision on March 20th, stating that there are six trading days between the end of the BTFP and the Fed rate decision. He predicts that the market will bankrupt a few banks within that period, forcing the Fed to cut rates and announce the resumption of the BTFP.
Bitcoin’s resilience amidst market volatility
Despite the potential initial decline in Bitcoin, Hayes believes that the cryptocurrency will rebound before the Fed meeting. He emphasizes that Bitcoin is the only neutral reserve hard currency that is not a liability of the banking system and is traded globally. Hayes suggests that Bitcoin knows the Federal Reserve consistently responds to market downturns with liquidity injections. He points out that while the Fed may use different terminology, printed money in any form remains printed money. As a result, Hayes predicts that Bitcoin will rise sharply leading up to and during the Fed’s capitulation to restarting the money printer.
As always, investors should do their due diligence and consider the risks associated with high-risk investments in Bitcoin and other cryptocurrencies. Market volatility and potential loses are the responsibility of individual investors.
Analyst comment
Neutral news.
As an analyst, the market may experience a short-term drop in Bitcoin’s price below $40,000 due to the US Treasury announcement. However, there is potential for a market correction and Bitcoin’s recovery, particularly if the Federal Reserve eases monetary policy. Bitcoin’s resilience and its role as a neutral reserve hard currency could lead to a rebound before the Fed meeting. Investors should be cautious and consider the risks involved in high-risk investments like Bitcoin.
