Former BitMEX CEO Arthur Hayes expressed optimism regarding Bitcoin’s future trajectory, suggesting that the recent downturn marks a local bottom, with the flagship crypto poised for a gradual ascent over the coming months.

Hayes shared his insights in a blog post on May 3, attributing the recent market slump to a variety of factors, including the US tax season, concerns over Federal Reserve policies, the “sell the news” effect following the Bitcoin halving, and a slowdown in spot Bitcoin ETF inflows.

 

Despite these challenges, Hayes remains confident in Bitcoin’s resilience, characterizing the 12% retreat this week as a “well-needed market cleansing.”

BTC range

According to Hayes, Bitcoin experienced a local low of approximately $58,600 earlier this week before rebounding to surpass the $60,000 mark. He anticipates BTC will maintain a range between $60,000 and $70,000 until August.

Hayes foresees a gradual uptrend in the crypto markets, propelled by increased dollar liquidity resulting from the Federal Reserve’s quantitative tightening (QT) taper and the US Treasury’s debtww issuance plans.

This “stealth money printing,” as Hayes described it, is expected to inject more liquidity into the markets, potentially benefiting riskier assets like cryptocurrencies.

 

“The slow addition of billions of dollars of liquidity each month will dampen negative price movement from here on out.”

Hayes added that he believes Bitcoin prices will stabilize before embarking on a gradual ascent.

At the time of reporting, Bitcoin prices had recovered by 4.2%, trading at $59,804. However, the crypto remained down 19% from its mid-March all-time high, based on CryptoSlate data.

While uncertainties persist in the crypto market, Hayes’ outlook suggests a cautious optimism, with Bitcoin poised for a gradual recovery in the months ahead.

Treasury policy

Hayes also recently predicted that upcoming US Treasury policy decisions, led by Secretary Janet Yellen, could have a profound impact on market liquidity, potentially sparking rallies in both crypto and stock markets.

He suggested the Treasury has three potential options, each capable of injecting significant liquidity, ranging from $400 billion to $1.4 trillion, into the financial system. These scenarios involve strategies such as zeroing out the Treasury General Account balance, shifting to short-term borrowing via Treasury bills, or a combination of both.

 

Hayes emphasized Yellen’s pivotal role in these potential developments and predicted positive market reactions, although analysts remain divided on the feasibility and consequences of such actions. As the Treasury’s next policy announcement approaches, anticipation mounts within the financial community regarding the potential influence of these decisions on global markets.

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Author: Assad Jafri

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