Bitcoin Faces $15K Crash As US Triggers ‘Financial Crisis’ – Arthur Hayes

In his latest Blog post Released on January 19, former BitMEX exchange CEO Arthur Hayes predicted a “global financial crisis” in the future thanks to the economic woes of the United States.

Hayes: Crypto will “smoke” in Fed pivot

Bitcoin’s current rally should probably not be taken as the start of a new bull run.

That’s the opinion of Arthur Hayes, who warned in a recent paper on US macroeconomic policy this week that the Federal Reserve’s current stance would reverse from restrictive to liberal, but cause crypto assets to “smoke.” will

With US inflation softening, the Fed has been the focus of virtually every crypto analyst this year as they move toward quantitative tightening (QT) and a policy “pivot” away from interest rate hikes to flat and then declining rates. Probability estimates, and possibly even quantitative ones. Easing (QE).

This essentially involves a move from eliminating the liquidity economy to re-entering it, and while this process has led to new all-time highs for bitcoin in 2020, Hayes believes That next time also the same phenomenon will not be a simple journey.

“If the removal of half a trillion dollars in 2022 produced the worst bond and stock performance in a few hundred years, imagine what would happen if twice that amount was removed in 2023,” he wrote.

“Markets react when money is injected versus withdrawn — and thus, I expect the law of unintended consequences to bite the Fed in the ass as it withdraws liquidity.”

Thus, rather than a smooth transition away from QT, Hayes is betting on extreme conditions forcing the Fed to act.

“Part of the U.S. credit market collapses, leading to widespread financial impairment of financial assets,” he explained.

“In a similar response to the action taken in March 2020, the Fed called an emergency press conference and halted QT, cut rates significantly and resumed quantitative easing (QE) by buying bonds again.”

This results in a “pit of risky asset prices”.

“Bonds, equities, and every crypto under the sun go up in smoke as the glue holding the global USD-based financial system together dissolves,” the blog post continues.

Current estimates, as shown by the CME Group. FedWatch toolstrongly favors slowing the pace of the Fed’s rate hike at its next decision on February 1.

Fed target rate probabilities chart. Source: CME Group

Planning a March 2020 rerun

Hayes is not alone in doubting that Bitcoin is currently a firm “bought” after two weeks of near-vertical price growth.

Related: Bitcoin hits 4-month high as US PPI, retail data posts ‘major decline’

As Cointelegraph ReportedVarious observers claim that new macro lows will still appear, with BTC/USD clearing its floor from Q4, 2022.

Those who take a leap of faith and pile up now face grave danger before reward.

“This scenario is less ideal because it would mean that anyone buying risky assets now would suffer a massive underperformance. 2023 could be as bad as 2022 unless the Fed pivots, Hayes wrote, nevertheless calling this scenario his “base case”.

If this means a retest of the 2022 low, the area between $15,000 and $16,000 will be a key zone of interest going forward.

“I’ll know the market is probably down, because the crash that happens when the system breaks down temporarily will either hold the previous $15,800 low, or it won’t,” That concludes the blog post.

“It doesn’t matter what level is ultimately reached on the downdraft because I know the Fed will later print money and avert another monetary collapse, resulting in the domestication of all risky assets. The level will be marked. And then I get another setup like March 2020 that requires me to back up the truck and buy crypto with two hands and a shovel.

Bitcoin (BTCArthur Hayes says that as part of a large-scale risk asset capitulation ) faces a shortfall of $15,000 “or less.”

BTC/USD 1 Hour Candle Chart (Bitstamp). Source: TradingView

BTC/USD rallied to $20,800 at the Wall Street open on January 19, according to data Cointelegraph Markets Pro And Trading View Shown

The views, opinions and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.