The former CEO of BitMEX has declared that he will be releasing a significant amount of Bitcoin shortly, sparking optimism in the cryptocurrency community that the positive trend will persist until mid-year.
A previously cautious investor has stated that Bitcoin (priced at $21,923), Ether (priced at $1,536), and even newly established altcoins are now strong investments to consider.
Hayes changes tune on “risky assets”
Arthur Hayes, the former CEO of BitMEX, has changed his views on investment in cryptocurrency due to current macroeconomic conditions in the United States. Previously, he was wary of investing in “risky assets” due to the Federal Reserve’s rate hikes and slowing inflation. However, with new economic challenges emerging in the U.S. and the Fed, Congress, and Treasury having significant control over the economy, it is difficult to predict the outcome of these events for the rest of the year. Hayes now believes that the first half of 2023 may be favorable for cryptocurrency investments. This contrasts his previous stance from mid-January, where he expressed concerns about a potential market decline caused by the Fed and chose to keep his spare capital in money market funds and short-term U.S. Treasury bills. Despite missing out on the current surge in cryptocurrency prices, Hayes plans to eventually invest in crypto.
Arthur Hayes commented that Bitcoin still has room for growth despite already gaining 40% in January, likening the current investment climate to the beginning of quantitative easing in 2009.
The economic situation in the current year is complicated, with the Federal Reserve transitioning from a period of quantitative easing to quantitative tightening, causing a reduction in liquidity in the U.S. financial system to the disadvantage of risk assets. Despite this, half of the first year may bring some relief as liquidity is temporarily restored to avoid reaching the debt ceiling too soon. According to Arthur Hayes and others, this trend could persist until the summer, when Congress is expected to vote to increase the debt ceiling.
According to a blog post, the Treasury General Account (TGA) will be depleted to $500 billion, offsetting the $100 billion in liquidity that the Federal Reserve is removing from the system. The blog predicts that the TGA will be exhausted by mid-year, resulting in a political debate around increasing the debt limit. The post states that it is safe to assume that the debt limit will be raised, as a failure to do so would lead to the collapse of the Western-led fiat financial system.
Looking out for macro “unwinding.”
According to Arthur Hayes, the timing of investments is crucial. Once the situation changes and risk assets become a problem for investors, he plans to convert his assets into U.S. dollars and selectively invest in risk assets, with Bitcoin at the top of his list. He acknowledges that his investment size may not significantly impact the price of Bitcoin.
The blog post concludes by stating that altcoins present a major opportunity, but timing is also key in this market. Hayes explains that the crypto market goes through cycles, with first Bitcoin and Ether rallying, followed by a rally in altcoins, and then interest shifting back to Bitcoin and Ether. This process repeats again and again until the end of the secular bull market.