Arthur Hayes, one of the founders of BitMEX, announced in his latest evaluation that he is no longer purchasing new Bitcoin. Hayes stated that the US Federal Reserve will not put capital back into the market without a clear signal of expansion in the money supply. With this approach, he showed that he was acting carefully before a new upward wave started in the market.
The Reason Hayes Was Waiting
Despite the recent upward momentum in Bitcoin, Hayes primarily tracks an indicator he calls “Net Liquidity.” According to this metric, when the Treasury General Account and Reverse Repo balances are removed from the Fed balance sheet, it is stated that real financial liquidity does not increase at the expected rate. Hayes thinks that despite rising prices, the amount of dollars in circulation has not increased significantly. Therefore, he underlines that current market conditions may be misleading for investors expecting a straight upward move.
Prominent Support and Resistance Levels in Bitcoin
Bitcoin continues to trade below the $90,000 psychological resistance. According to Hayes’ analysis, if this level is not crossed soon, the price is likely to correct up to $60,000 and late buyers will be eliminated from the market. It is also stated that if the $ 60,000 level is broken, liquidations may be triggered with a domino effect and a serious selling pressure may be seen in the short term. On the other hand, it is stated that institutional investors on Wall Street have strategically purchased Bitcoin, but have not yet taken it to an aggressive upward movement.
Arthur Hayes says that if the Fed starts monetary expansion, a new movement may be seen in the market. The current outlook highlights the view that Bitcoin may trend sideways or slightly downward unless the Central Bank loosens monetary policy.
Hayes states the following in a podcast he participated in:
If I had a single dollar to invest right now, I wouldn’t invest it in Bitcoin. I would wait until it becomes clear that the Fed will explicitly increase the money supply.
In addition, although he thinks that geopolitical risks occasionally create demand for safe haven assets in the short term, he emphasizes that the main factor for crypto markets is changes in the real money supply.
Market data shows that Bitcoin is starting to diverge from various traditional financial assets. Attention is drawn to the potential of this divergence to increase volatility. It is stated that if the Fed is forced to cut interest rates, the $ 90,000 ceiling can be exceeded quickly.
In a reverse scenario, it seems difficult for Bitcoin to make a significant upward break unless monetary policy is loosened. Hayes expects the “Net Liquidity” indicator to turn green for capital flows to accelerate again.
