Arthur Hayes, the co-founder and former CEO of BitMEX crypto exchange, has expressed his positive outlook on the future of Bitcoin’s price. He believes that the price has reached its lowest point and will gradually recover. Hayes attributes the recent downward trend to factors such as the US tax season, uncertainty surrounding the Federal Reserve’s actions, and the impact of the Bitcoin halving event. However, he sees these indicators as necessary adjustments for the market.
Hayes’ optimism is fueled by the Federal Reserve’s recent announcement regarding its quantitative tightening (QT) policy. The Fed has stated that it will decrease the rate of QT, which reduces the circulation of money in the economy. This decision will result in a monthly cap on maturing Treasuries of $25 billion, down from $60 billion, and an annual reduction in holdings of $300 billion.
According to Hayes, this reduction in QT will increase the amount of stimulus provided to global asset markets each month, thanks to the combination of Interest on Reserve Balances, RRP payments, and interest payments on US Treasury debt. He predicts that as the Fed tapers QT, billions of dollars of liquidity will be added, offsetting negative price movements and gradually pushing crypto prices higher.
Hayes describes the Fed’s approach as a form of “stealth money printing,” where gradually reducing its balance sheet will ease dollar liquidity and stabilize market conditions. He believes that this liquidity injection will have a positive impact on Bitcoin’s price, although the pace of increase may be slow.
Dr. Jeff Ross, the founder and CEO of Vailshire Capital Management, shares similar sentiments with Hayes. He suggests that the widely held belief that the Bitcoin bull market has concluded may be incorrect and that the actual bullish run for the Bitcoin price may be yet to start.
Overall, Hayes’ outlook on Bitcoin’s price rally is based on the Federal Reserve’s shift in QT policy and its potential impact on dollar liquidity. He predicts a stabilization around $60,000, followed by fluctuations within the $60,000 to $70,000 range until August 2024.