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Cryptocurrencies are anticipated to have significant volatility in the second half of April pertaining to Bitcoin halving.
Arthur Hayes, co-founder of BitMEX said, “The Bitcoin halving this month, combined with a “bag of tricks” from the Federal Reserve and Treasury, will “add propellant to a raging firesale of crypto assets” and depress the crypto market for weeks.”
Views of Arthur Hayer
On April 8, he shared in a blog post that he believed that Bitcoin halving would push up prices in the medium and short term but told that crypto prices could move in the negative direction before and after the event.
He wrote, “The narrative of the halving being positive for crypto prices is well entrenched. When most market participants agree on a certain outcome, the opposite usually occurs.”
Crypto market enthusiasts believe that around the time of bitcoin halving liquidity of dollar will also be lower than usual. Hayes believes that his theory on the impact of United States Federal Reserve and Treasury policies.
He said, “That is why I believe Bitcoin and crypto prices in general will slump around the halving […] It will add propellant to a raging firesale of crypto assets.”
“Could the market defy my bearish inclinations and continue higher? Fuck yeah,” he wrote. “I’m perennially long as fuck crypto, so I welcome being wrong.”
He made a note that the second half of April will be a significant period of risky assets as U.S. tax payments have eliminated liquidity. The Fed started Quantitative Tightening (QT), which led to a decrease in the money supply and the Treasury’s General Account (TGA), which is basically the government’s checking account, is pending to be used.
The Fed Meeting is scheduled for May 1 and the changes will be implemented from May 1. He expects that the Fed meeting will reduce the pace of money supply tightening and the Treasury from the TGA is anticipated to release a liquidity flow of an additional $1 Trillion into the system.
Hayes said that he will halt his trading activities until May due to the upcoming halving and the Fed and Treasury’s bag of tricks.
In a year, Bitcoin has increased over 60% from a value of approximately $42,000 to an approximately $71,000, as recorded in the media.
Greed Analysis on Bitcoin
There has been an observed increase in market sentiment as measured by the Crypto Fear and Greed Index. To stay in the Greed, it needs a score of 50 out of a possible of 100 or above after January 27.
On April 9, the chart showed extreme greed at a score of 80, an increase from the score of 76.
Source: Alternative.me
In the beginning of the year, the score was standing at 65, meaning Greed, but then marked a high of 90 on March 5. This high is the highest in two years.
In the end, Hayes specified that if the liquidity scenarios he considered and theorized came true, it would substantially increase his confidence in the market.
He concluded that “If I miss a few percentage points of gains but definitely avoid losses for my portfolio and lifestyle, that is an acceptable outcome.”
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
