Arthur Hayes, the co-founder and former CEO of BitMEX, thinks Bitcoin could be in for a good week after a series of bad ones.
This morning, he closed out a Bitcoin short position, pocketing a modest 3% profit—enough, according to him, to cover food and bar tabs for Korea Blockchain Week (KBW).
He also believes that if certain market conditions continue to deteriorate, Bitcoin could see a rise in value. In his words:
“If stuff continues to puke next week, Bitcoin MIGHT rise, anticipating more liquidity.”
Arthur calls the Federal Reserve’s bluff
Arthur Hayes has been vocal about his dissatisfaction with the Federal Reserve’s policies. He doesn’t think they’ve done much to curb the real driver of inflation, which we all know is government spending.
According to him, the Fed’s so-called restrictive policies are jokes, and the notion of its independence is just a story for “gullible economist acolytes.”
Instead of expecting the Fed to take meaningful action, Arthur points to the bond market. The rise in 10-year Treasury yields after the Fed’s 2023 pause is a red flag.
Headquarters of the Federal Reserve in Washington, D.C.
He expects the upcoming rate cuts to push those yields dangerously close to 5%, which he describes as a critical threshold.
At that point, the crypto elite predicts that Treasury Secretary Janet Yellen will step in to inject liquidity into the market, just as she did last year when bond yields surged.
He warned that when 10-year Treasury yields hit 5%, it won’t just stop the stock market in its tracks—it’ll cause concerns about the health of smaller banks and push mortgage rates higher.
That’s a bad combo for voters as the US heads into a heated election cycle. And, of course, Bitcoin stands to benefit from the resulting chaos.
Expect a flood of money… and a Bitcoin rally
In Arthur’s opinion, Yellen’s loyalty to the Democratic Party and its future presidential nominee, Kamala Harris, will force her to act fast. The first step will be to start running down the Treasury General Account (TGA).
However, it probably won’t end there. Arthur also thinks Yellen will nudge Federal Reserve Chairman Jerome Powell to stop quantitative tightening (QT) and possibly even restart quantitative easing (QE).
The result of all this monetary maneuvering? More liquidity in the system, which is always a good thing for risk assets like Bitcoin.
As Arthur explains, the size of the money injections must be large enough to counterbalance the rising reverse repurchase (RRP) balance.
Janet Yellen
Critically, Arthur warns that Yellen’s timeline is tight. If she doesn’t act quickly, the situation could spiral into a full-blown crisis, one that could destroy voter confidence in the US economy.
That, according to Arthur, would be disastrous for Harris’ election chances. He jokes that, in such a scenario, the only thing that could save Harris is a miracle discovery of mail-in ballots.
Arthur, known for his sharp commentary, even threw in a dark joke, referencing Stalin: “It’s not the people who vote that count; it’s the people who count the votes.”
If Yellen steps in soon, as Arthur expects, he thinks Bitcoin will start to chop sideways, while altcoins might take a deeper dive. In an earlier statement, Arthur had said that the bull market would kick off in September.
Now, he’s walked that back but clarified that it doesn’t change his positioning. He’s still holding his Bitcoin and has no plans to sell.
His portfolio strategy? He’s “long as f**k” in Bitcoin without using leverage, and his focus now is on accumulating discounted altcoins that have real users paying real money for products.
For traders looking for short-term wins, Arthur has a simple message: Don’t ask him for tips. He admits his short-term predictions are no better than flipping a coin. But his short-term views are bearish.
Arthur ended in a slightly humorous tone, saying:
“But I promise one day my short-term predictions will be more accurate … maybe … I hope.”
Do technicals and derivatives support Arthur?
Bitcoin’s technicals seem to be supporting the potentially bullish week. Right now, Bitcoin is trading at around $54,503, down slightly by 0.30%. The price is in a tight range, so we’re in consolidation.
It is facing resistance from both the 50-period moving average at $54,438 and the 200-period moving average at $57,019.
The MACD line sits at 33.51, and while the histogram is still negative at -20.20, it’s shrinking. If the MACD line crosses above the signal line, it would signal a bullish trend, and Bitcoin could rally.
The RSI is sitting at 48.94, just under the neutral 50 mark. Looking at derivatives data, Bitcoin seems to have support from the broader market. Trading volumes have dropped by 63.68%, while open interest has decreased slightly by 0.58%.
On Binance, the long/short ratio stands at 2.74, meaning there are almost three times as many long positions as short ones. The ratios on other exchanges are in similar ranges, so you know traders are preparing for a rally.
Liquidations in the past 24 hours have totaled $10.88 million, with $6.10 million coming from short positions. This further supports the bullish narrative.
So yes. All in all, the data and market sentiment do seem to be leaning toward a good week for Bitcoin. But as always in crypto, anything can happen.
