Arthur Hayes Predicts Bitcoin and Altcoin Price Will Increase in The First Half of 2023
Arthur Hayes, a co-founder and former CEO of cryptocurrency exchange BitMEX, reversed his decision regarding his current cryptocurrency investments in a blog posted on 8th Feb.
Due to the United States Federal Reserve’s current macroeconomic circumstances, Arthur Hayes is averse to investing in any “risky assets.”
As inflation moderates in line with the Fed’s rate increases, different economic issues are arising in the U.S., and these entities will direct the economy according to their own decisions, he states.
Predicting how these occurrences will progress during the course of 2023 is a challenge for Hayes. It is likely that the first half of the year will be a favorable period for crypto investments, while the second half remains uncertain.
In mid-January, the former BitMEX CEO had expressed his apprehension of a market crash due to Federal Reserve intervention. However, this opinion is now in contrast to that statement.
“My concerns about this potential outcome, which I handicapped would most likely happen later in 2023, has led me to keep my spare capital in money market funds and short-dated U.S. Treasury bills,” he said.
“As such, the portion of my liquid capital that I intend to eventually use to purchase crypto is missing out on the current monster rally we’re seeing off of the local lows. Bitcoin has rallied close to 50% from the $16,000 lows we saw around the FTX fallout.”
Hayes suggested that Bitcoin is still on the rise despite its 40% growth in January, comparing the current risk asset climate to 2009 when quantitative easing began.
This year, the situation is complicated — what used to be quantitative easing has been replaced by quantitative tightening, resulting in liquidity being taken out of the U.S. financial system and impacting risk assets.
H1 appears to be providing some respite, as liquidity has come back to keep them from reaching the debt limit too quickly. This could persist until Congress votes to increase the debt ceiling later in the year, which Hayes and others maintain is unavoidable.
The Treasury General Account will be depleted by $500 billion, canceling out the Federal Reserve’s monthly decrease of $100 billion in liquidity.
The blog post foresees that the TGA will be depleted by mid-year, and then a political commotion over increasing the debt ceiling will ensue.
“Given that the Western-led fiat financial system would collapse overnight if the US government decided to forgo raising the debt ceiling and instead defaulted on the assets that underpin said system, it’s safe to assume the debt ceiling will be raised.”
Searching for Macroeconomic Unwinding
At that point, the situation will reverse and risky investments may once again be a source of difficulty for all investors.
Hayes is of the opinion that timing is essential and his strategy involves transitioning from U.S. dollars to certain riskier investments, with Bitcoin being the foremost choice.
“I’ll deploy over the coming days. I wish my size actually mattered, but it doesn’t — so please don’t think that when this happens, it will have any discernible effect on the price of the orange coin,” he told readers.
In the end, the blog post states that altcoins offer a major chance of success, depending on when they are implemented.
“The key to shitcoining is understanding they go up and down in waves. First, the crypto reserve assets rally — that is, Bitcoin and Ether. The rally in these stalwarts eventually stalls, and then prices fall slightly,” Hayes wrote about crypto market cycles.
“At the same time, the shitcoin complex stages an aggressive rally. Then shitcoins rediscover gravity, and interest shifts back to Bitcoin and Ether. And this stair-stepping process continues until the secular bull market ends.”
So far this year, the overall value of cryptocurrencies has risen by about 34%.
In 2023, the process will be guided by the “unwinding” of the short period of more favorable economic conditions that is currently appearing in the United States.