The price of cryptocurrencies has fluctuated dramatically recently; earlier this week, Bitcoin saw a notable 12% decline.
However, according to former BitMEX CEO Arthur Hayes, this correction was a “well-needed market cleansing,” and it marked the start of a slow but steady comeback for the most prominent cryptocurrency in the world.
Hayes wrote a blog post on May 3 offering his thoughts on the recent market downturn, contending that the “price action played out as I expected.”
Bitcoin’s Local Bottom And Range-bound Movement
Hayes believes Bitcoin has hit a local bottom of around $58,600 and will rally back above the $60,000 mark in the coming days.
He expects the cryptocurrency to remain range-bound between $60,000 and $70,000 until August, as the market consolidates and prepares for the next bull run phase.
The 23% decline in Bitcoin was the fourth pullback of comparable size in the previous 12 months, suggesting a robust market cycle.
Hayes attributes this recent sell-off to a combination of factors, including the tax season in the United States, concerns over Federal Reserve decisions, the Bitcoin halving “sell the news event,” and a slowdown of spot Bitcoin exchange-traded fund inflows.
The Influence Of Liquidity On Crypto Markets
One key driver for Hayes’ optimistic outlook is the anticipated increase in dollar liquidity resulting from the Federal Reserve’s quantitative tightening (QT) taper and the U.S. Treasury’s debt issuance plans.
By tapering QT, the Fed effectively injects more liquidity into the markets, which could theoretically make its way into riskier assets such as cryptocurrencies, providing buying pressure.
Hayes views this as “stealth money printing,” which he believes is positive for high-risk assets like Bitcoin. “The slow addition of billions of dollars of liquidity each month will dampen negative price movement from here on out,” he added, predicting that prices will “bottom, chop, and begin a slow grind higher.”
A Shared Outlook On A Sideways Market
Hayes is not alone in predicting a sideways market for the next few months. Jeff Ross, the founder and CEO of Vailshire Capital Management, expressed a similar sentiment, stating that he was “still respecting the ongoing bullcrab market” despite the recent doom and gloom.
Ross views the Fed’s “rhetoric pivot” as the official transition from “bad-to-less-bad liquidity conditions,” which could pave the way for an accumulation opportunity in the coming weeks.
He believes analysts and traders calling for the end of the Bitcoin bull market “may be dismayed to learn that the actual bull market hasn’t even started yet.”
Institutional crypto brokerage MatrixPort also reiterated its outlook that post-halving, “Bitcoin tends to move sideways afterward for four to five months based on previous instances.”
Conclusion
Experts’ opinions on the current decline in the bitcoin market are varied. Former CEO of BitMEX Arthur Hayes is upbeat, speculating that Bitcoin may have peaked and would gradually rise again in the upcoming months.
He believes that assets like Bitcoin will benefit from the greater liquidity of the Federal Reserve and the US Treasury.
While consolidation and stability may characterize the near future, Hayes and others anticipate that Bitcoin’s true bull market is yet to come, making this an excellent time to accumulate for future gains.
