Arthur Hayes is the co-founder and Bitcoin pioneer of crypto derivatives platform BitMEX. He has spoken out about the current market state in an interview. interview Scott Melker
Hayes believes that Bitcoin is at its bottom phase, despite the possibility of a recession in the U.S. He believes the main cause of the boom and bust cycle was the excessive monetary policy.
“If we take a step back and look at why BTC went up so high because [… ] the biggest economy in the world printed the most money they’ve ever done. Obviously a lot of money flowed into crypto,” the BitMEX founder said.
It is imperative to reverse this excess now. Notably, it also contributed to the “behavior of Sam Bankman-Fried, FTX, Kyle, Zhu and all of the centralized money platforms. All bankrupt and insolvent.”
Bitcoin Bottom is In
Looking forward, this is the key bottom indicator for Hayes as “pretty much everyone who could go bankrupt has gone bankrupt”.
Surprisingly, the companies that were bankrupt sold Bitcoin and Ethereum first, which is a sign of the market’s health. By contrast, “dog and shitcoins” are still left on their balance sheets because they are super illiquid, Hayes noted.
He added, “if you look at Alameda’s balance sheet, there’s no BTC on there. They were about to go bankrupt and sold Bitcoin. The shitcoins are left.”
That’s another reason why BTC will be ringing the bell for the end of the bear market, while some altcoins will remain depressed, Hayes asserted:
[Bitcoin is] the most pristine and most liquid asset, and that’s why it will lead us off the bottom too. The shitcoins are sure to follow. But there’s a lot of bags held by bankrupt companies who need to liquidate them.
However, for Bitcoin, I feel very certain that the most responsible and largest entities have sold all Bitcoins to diamond owners.
In the addendum, the BitMEX founder went on to say that he can’t prove that all the BTC held by these failed entities were sold during the crashes, but it looks like it.
His recent blog post, Hayes added that he currently sees no reason why people should not hold Bitcoin unless they have a “pressing need for fiat money.”
The real test for Bitcoin will be in 2024/2025
Looking further into the future, the BitMEX founder believes BTC will bounce back next year as the U.S. treasury and bond market will become dysfunctional sometime in 2023 due to the Fed’s tighter monetary policy.
Hayes predicts that at that time, the Fed will turn on its money printer. Bitcoin and all risk assets will soar. However, Bitcoin will serve as an indicator and will decouple from the S&P500 beforehand.
BitMEX founder also doesn’t expect the real test for Bitcoin to be a recession until 2024 or 2025. Forecasts a “generational collapse” to happen.
“Hopefully it’s better than the 1930s, but depression-like. And then the question is, can Bitcoin outperform the 10-year treasuries and really high inflation?”, Hayes said.
The BTC and dollar markets will continue to be closely related until then. It remains to be determined if Bitcoin can truly act as an inflation hedge. “That’s the real test”, Hayes concluded.
As of press time, BTC had lost 1,1% in the past 24 hours. The price was $16,973.