Arthur Hayes Predicts Sharp Bitcoin Correction in March: Anticipates 20% to 30% Drop Amidst Market Fluctuations
This article is based on the piece titled “Signposts” authored by Arthur Hayes.
BitMEX Co-Founder Foresees a Bitcoin Dip
Arthur Hayes, the co-founder and former CEO of cryptocurrency derivatives exchange BitMEX, shared his insights on January 5th about the current crypto market trajectory. While reaffirming his belief that the crypto market is in the early stages of a bull run, Hayes predicts a 20% to 30% decline in Bitcoin’s value in early March. He views this as a ‘healthy correction,’ yet cautions investors about the potential market volatility.
Further reading：PlanB Foresees a Frenzied Bull Market for Bitcoin: Highlights RSI Indicator and Suggests Lower Risks for Bulls
Key Variables Impacting March’s Crypto Market
Hayes is closely monitoring three critical variables converging in March this year: changes in the balance of the US Overnight Reverse Repo (RRP) agreement, the renewal of the ‘Bank Term Funding Program’ (BTFP), and the Federal Reserve’s interest rate decisions. These interdependent factors are crucial as they will influence market expectations regarding the liquidity provided (or not) by the Fed and the Treasury, thus impacting crypto market trends.
Potential Impact of a Spot Bitcoin ETF
Hayes speculates a more dramatic decline in Bitcoin prices if a US-listed spot Bitcoin ETF is operational by that time. He envisions a scenario where the market expectation of “billions in fiat flowing into these ETFs” could drive Bitcoin close to its 2021 peak of nearly $70,000. However, due to potential liquidity shortages, a significant pullback is still likely, with a drop range of 30% to 40%.
Further reading：Spot Bitcoin ETFs on the Brink of Approval: Grayscale, Fidelity, Ark, Valkyrie Submit Key SEC Forms
Hayes’ Strategy Amid Expected Volatility
In anticipation of this turmoil, Hayes plans to refrain from buying Bitcoin until after the turbulent period in March. He aims to sell at the market peak in late February and then purchase a substantial amount of put options in early March. He reveals his preference for options expiring on June 28th over those expiring on March 29th, to minimize the impact of time decay on profits.
Outlook for Post-March Market Recovery
Hayes expects the market to normalize by the end of March, with reassurances from US Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell to maintain stability in the US financial system. Following the brief market disturbance and in light of Bitcoin’s upcoming halving event, cryptocurrencies are likely to soar again. Hayes plans to resume selling US Treasuries and buying Bitcoin and other cryptocurrencies after the market stabilizes.
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Keywords: Arthur Hayes, Bitcoin, Cryptocurrency, Market Prediction, BitMEX, Bull Run, Spot Bitcoin ETF, Market Volatility, Federal Reserve, US Treasury, Janet Yellen, Jerome Powell, Crypto Market Trends, Bitcoin Halving
