A resurgence of the March banking crisis threatens a 40% fall in the price of Bitcoin – Arthur Hayes
Bitcoin (BTC) trading OG Arthur Hayes is now predicting a BTC price drop of up to 40% in March.
In a blog post on January 4, the former CEO of crypto trading giant BitMEX warned readers of a week of turmoil due to financial markets.
Hayes on BTC price: “I could easily see a 30% to 40% correction”
Bitcoin bulls are feeling confident this year as the first U.S.-based bitcoin exchange-traded funds (ETFs) are slated to receive regulatory approval.
Coupled with the block grant halving in April, the events could be a historic year for BTC's price expansion thanks to institutional money and widespread adoption.
That, for Hayes, was not destined to be all in a straight line. The reason, he said, is the US Federal Reserve and its efforts to keep inflation under control but in a volatile economy.
Specifically, March marks the end of the Fed's Bank Term Funding Program (BTFP) — a facility established in response to the 2023 regional banking crisis. A week later, the Federal Open Market Committee (FOMC) must decide whether to raise, hold or cut interest rates.
“The BTFP ends on March 12, and the Fed's rate decision will be announced on March 20. There are six trading days between these two critical decision points,” Hayes said.
If my prediction is correct, the market will sue a few banks during that period, prompting the Fed to cut rates and announce the restart of the BTFP.
Bitcoin and crypto are very sensitive to macro liquidity changes, and the Fed bailout will certainly help their cause – but only after an initial shock after volatility picks up again in 2023.
“Bitcoin will initially fall sharply against the broader financial markets but rebound before the Fed meeting because Bitcoin is the only independent reserve hard currency that is not accountable to the banking system and is traded globally,” Hayes continued.
“Bitcoin knows that when things go bad, the Fed will always respond with a liquidity injection.”
He added that Bitcoin “will always be known as printed money in any form” and thus “increases significantly before and eventually by the Fed to restart money printing.”
The kind of drop on the cards is between 20% and 30% of the level at which BTC/USD was trading at the start of March. The sharing, as Hayes explains, then serves as the ultimate catalyst for inverted continuity.
He concluded.
I could easily see a 30% to 40% correction due to the dollar liquid carpet pull. This is why I can't buy bitcoins until these March decision days pass.
Bitcoin analysts remain divided on the ETF's impact.
For the near term, ETF approval narratives continue to drive BTC price volatility.
RELATED: Bitcoin Bull Market Gauges ‘Reset Near' As BTC Price Hovers At $43K
Fears of a possible default have led to a near 10% decline this week. At the same time, various analysts believe that Bitcoin is already in a more significant correction – even if the EFAs are real.
Against this is John Bollinger, the inventor of the Bollinger Bands volatility indicator, which predicts a positive reaction based on the instrument's readings.
“I think it will break higher,” he concluded on X (ex-Twitter) about BTC/USD.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
