In March, the crypto market will face imminent macroeconomic risks, according to BitMEX co-founder Arthur Hayes. In his analysis, Hayes explores the potential impact of the Federal Reserve’s Reverse Repo Program (RRP), the Bank Term Funding Program (BTFP), and an upcoming interest rate decision on the stability of the cryptocurrency market.
Hayes starts by discussing the Reverse Repo Program, which is a tool for short-term liquidity management. He notes that the decline in the RRP balance has injected liquidity into the financial markets, but warns of the need for alternative sources of dollar liquidity to support the market.
Another factor Hayes evaluates is the Bank Term Funding Program, which expires on March 12th. He suggests that US Treasury Secretary Janet Yellen could oppose its renewal initially, causing concerns about financial instability due to reduced liquidity. However, if major banks fail, Yellen may reconsider and renew the program, leading to a chain reaction affecting not only the banking sector but also broader financial markets and crypto assets.
Hayes also considers the upcoming Federal Reserve meeting on March 20th and predicts the possibility of an interest rate cut. He believes this sequence of events is crucial for determining future dollar liquidity availability and anticipates a significant correction in the cryptocurrency market around March 12th, followed by a rebound fueled by expectations of further liquidity injection.
Hayes predicts a “significant correction” in Bitcoin around March 12th, with a potential 20%-30% correction that could rise to 30%-40% under certain conditions. However, he expects a recovery of the positive trend by the end of March, supported by speculations about an upcoming halving event in April.
While acknowledging alternative outcomes, Hayes mentions that unexpected variables such as yuan credit injection by China or shifts in Japanese investor behavior could impact these forecasts.
In conclusion, Hayes provides a comprehensive analysis of macro risks in March and highlights their potential impact on liquidity and the stability of the cryptocurrency market. Market operators will closely monitor these factors throughout the month, considering Hayes’ insights.
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