BitMEX Co-Founder Arthur Hayes has predicted a massive correction in Bitcoin’s price, anticipating a decline ranging from 20% to 30% by early March.
Hayes outlined his viewpoint in a detailed post, warning traders amidst the ongoing crypto bull market. Hayes anticipates a potential harsh correction in March, preparing for what he terms a “vicious washout” affecting crypto investors who may be considered “tourists” in the market.
Arthur Hayes wrote:
“I expect Bitcoin to experience a healthy 20% to 30% correction from whatever level it has attained by early March. The washout could be even more severe if the slate of US-listed spot Bitcoin ETFs has already commenced trading.”
The crypto industry veteran further opined that Bitcoin could see 30% to 40% correction if the anticipation of massive fiat inflows into Bitcoin ETFs propelled the cryptocurrency’s price above $60,000 and close to its 2021 all-time high of $70,000.
Hayes outlined three critical variables colliding in March that could impact the crypto market:
Reverse Repo Program (RRP) Balance Decline: Hayes highlighted the importance of monitoring the RRP balance, suggesting that if it approaches zero, the markets may experience a downturn. He linked the RRP balance decline to liquidity injection and the need for alternative sources to sustain market momentum.
Bank Term Funding Program (BTFP) Renewal: The decision on whether to renew the BTFP on March 12th becomes crucial, with implications for banks seeking cash to swap with U.S. Treasuries. Hayes predicted a potential non-renewal due to the upcoming election year.
Federal Reserve Rate Cut: The Fed’s March meeting on the 20th may see its first rate cut since 2021. Hayes analyzed the interdependence of these variables, suggesting that the sequence of events would influence the market’s assumption of future dollar liquidity from the Fed and the U.S. Treasury.
Arthur Hayes Expects Things to Back on Schedule By March End
Hayes noted that these variables are interdependent, and their sequence matters in shaping the market’s perception. He emphasized the need to assign probabilities to different scenarios and anticipate the market’s reactions.
The co-founder concluded by outlining his tactical trading decisions, including the potential use of Bitcoin puts as a hedge against the expected correction. Hayes cautioned against additional risk during this period, considering the uncertainty surrounding the identified decision points in March.
BitMEX co-founder remains bullish in the long term and expects that things will be back on schedule by late March.