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Former CEO of Bitmex, Arthur Hayes, in his recent statements warned about a potential 30 percent correction in the Bitcoin market. The cautionary note hinted at an even harsher situation if U.S-listed spot Bitcoin ETFs have commenced trading, citing that such a situation could trigger a 30 to 40 percent market correction due to a dollar liquidity rug pull. Hayes’ predictions were outlined in a post published on Medium last week where he also discussed potential impacts of spot Bitcoin ETFs on the price of Bitcoin.
Hayes points towards the interplay of three variables, which he predicts will clash in March. Firstly, he expects the Fed’s Reverse Repurchase Operations (RRPs) balance to reach a massive $200 billion by early March, stirring market curiosity about what may follow. The subsequent variable focuses on the banks’ need to find cash to swap with the U.S. Treasuries for the bonds they repo’d with the Fed. Lastly, the market is buzzing with speculation about whether the Fed will cut interest rates during the Federal Open Market Committee (FOMC) meeting on March 20. All these factors, coupled with the anticipation of heavy fiat inflow in the ETFs, could drive Bitcoin’s value closer to its 2021 high, before possibly leading to a 30 to 40 percent correction.
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