Former Bitmex CEO Warns of Potential Bitcoin Correction
Arthur Hayes, the former CEO of Bitmex, has predicted a potential 30% correction in the bitcoin market. He expressed caution about the impact of spot bitcoin exchange-traded funds (ETFs) on the price of bitcoin. Hayes expects the U.S. Securities and Exchange Commission (SEC) to approve multiple spot bitcoin ETFs soon.
Hayes outlined his bitcoin price forecast in a recent Medium post. He stated, “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 U.S.-listed spot bitcoin ETFs has already commenced trading.”
Factors Contributing to the Correction
Hayes identified three variables that may contribute to the predicted correction. First, he mentioned the Fed’s Reverse Repurchase Operations (RRPs) and predicted a balance of $200 billion in early March. Secondly, Hayes pointed out that broke banks need to find cash to swap with U.S. Treasuries and other eligible bonds they repo’d with the Fed on March 12th. Lastly, he questioned whether the Fed would cut interest rates at the Federal Open Market Committee (FOMC) meeting on March 20th.
Concerns about Spot Bitcoin ETFs
Hayes expressed concerns about the potential impact of spot bitcoin ETFs. He mentioned the possibility of bitcoin rising above $60,000 and facing a 30% to 40% correction due to a “dollar liquidity rug pull” once the ETFs are approved. The SEC has received proposals for 11 spot bitcoin ETFs and trading could begin soon.
Hedge and Timeline
Hayes shared his personal crypto portfolio, which consists of bitcoin and ether representing around 70% of his holdings. He explained that the liquidity of derivatives on other “shitcoins” is poor, so bitcoin derivatives are his hedge. He concluded by stating, “If my forecasts are correct, the market will start meaningfully correcting around March 12th.”
Hot Take: Be Prepared for a Bitcoin Correction
The former CEO of Bitmex, Arthur Hayes, has warned crypto investors about a potential 30% correction in the bitcoin market. Hayes identified various factors contributing to this correction, including the impact of spot bitcoin ETFs and the Federal Reserve’s actions. He believes that the correction could be even more severe if the ETFs have already commenced trading. With proposals pending for multiple spot bitcoin ETFs, the market could face a significant correction. Hayes predicts that the correction may occur around March 12th. It is important for crypto investors to be prepared for a potential downturn in the bitcoin market in the coming weeks.
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