Bitcoin recently hit a low near $80,000, and Arthur Hayes, the former CEO of BitMEX, believes this represents a fundamental support level. In light of changing liquidity conditions, he predicts a bullish shift for Bitcoin and other cryptocurrencies.
Key points:
- Arthur Hayes asserts Bitcoin has reached a support level at $80,000.
- The upcoming end to the US Federal Reserve’s quantitative tightening (QT) could benefit the crypto market.
- Anticipation around potential Fed rate cuts remains volatile.
Bitcoin (BTC) is likely to maintain its footing at $80,000 as US liquidity evolves to favor crypto bulls.
In his latest X post, Hayes indicated optimism for Bitcoin’s price recovery.
Hayes on BTC price: “I believe $80,000 will hold”
Last week, Bitcoin fell by over 35% from its all-time highs, hitting a recent low of $80,500, but according to Hayes, the worst is now behind us.
He attributes this outlook to US liquidity trends, noting that the Federal Reserve is set to conclude its current QT phase shortly, which will stop the reduction of its balance sheet and increase market liquidity for both crypto and risk assets.
“Minor improvements in liquidity,” he stated.
Hayes anticipates that the Fed’s balance sheet will cease shrinking after this week and highlighted that bank lending increased in November.
For the crypto market, this should lead to an uptick as increased liquidity generally benefits both Bitcoin and altcoins.
“We might temporarily dip below $90k, possibly test the low $80k range again, but I strongly believe that $80k will withstand the pressure,” Hayes added.
BTC/USD four-hour chart
BTC/USD four-hour chart. Source: Cointelegraph/TradingView
The former BitMEX leader has remained confident throughout Bitcoin’s decline from its October peak, reaffirming earlier this month the need for quantitative easing (QE) to alleviate pressure on Bitcoin’s price.
In a recent remark, he also emphasized that the stock market needs to experience a downturn akin to that of crypto before a recovery can begin.
“We are anticipating more money printing, and for that to happen, we require AI tech stocks to decline significantly,” Hayes concluded.
BTC/USD drawdowns chart
BTC/USD drawdowns from all-time highs. Source: Glassnode
Transition from Hawkish to Dovish
Market sentiments regarding potential changes in Fed policy have seen significant shifts amidst the ongoing US government shutdown.
Amid the absence of new macroeconomic data, speculations about a rate cut in December have fluctuated.
Recent figures from CME Group’s FedWatch Tool suggest a 79% probability for a 0.25% interest rate cut compared to just 42% from the previous week.
Fed target rate probability comparison
Fed target rate probability comparison (screenshot). Source: CME Group
Economic expert Mohamed El-Erian has remarked on the situation, labeling it as “stunning.”
“This kind of wild volatility is contrary to the ‘predictability and stability’ expected from the Fed, particularly as it is central to the global payments system,” El-Erian stated on X.
“It is the product of data disruptions caused by shutdowns, a squeeze on dual mandates, a temporary Chair, and a lack of a clear strategic framework from the world’s most influential central bank, which has been overly reliant on data for an extended period.”
This article does not provide financial advice. Each investment decision includes risk, and readers should perform their own due diligence.
