Arthur Hayes, the co-founder of the crypto exchange BitMEX, hints about the possibilities of a healthy Bitcoin correction in March.
Despite the enthusiasm during the early stages of the bull market, Arthur Hayes has warned about the potential for an upcoming correction.
Bitcoin Market Will Plummet Around March 12, Says Arthur Hayes
Arthur Hayes has declared that he would buy Bitcoin puts in anticipation of a correction of up to 40%.
“I expect Bitcoin to experience a healthy 20% to 30% correction from whatever level it has attained by early March. The washout could be even more severe if the slate of US-listed spot Bitcoin ETFs has already commenced trading.
Imagine if the anticipation of hundreds of billions of fiat flowing into these ETFs at a future date propels Bitcoin above $60,000 and close to its 2021 all-time high of $70,000. I could easily see a 30% to 40% correction due to a dollar liquidity rug pull. This is why I cannot buy Bitcoin until these March decision dates have passed,” Arthue Hayes stated.
Read more: How To Trade Bitcoin Futures and Options Like a Pro
He forecasted that Bitcoin might initiate its correction around March 12. Additionally, he intends to close his BTC put position by March 20, anticipating that the Bitcoin markets would have reached their bottom by then.
Possibility of Banking Collapse?
For the market correction, he cited many factors, including the declining balance of the Reverse Repo Program (RRP). The screenshot below shows that the RRP balance has declined sharply since early 2023.
Arthur believes that two factors can decimate the financial markets globally:
- Lack of liquidity from the RRP
- Lack of printed money to cover the bond losses of some banks’ balance sheets.
“The market must bring pain upon financial asset holders to force the Fed and Treasury back into the business of printing money. This is a correlation one moment. All assets, including crypto, will fall together as the market hyperventilates at the prospect of the free market working once more and cleansing the system of insolvent banking institutions,” Hayes added.
Last year’s Bank Term Funding Program (BTFP) expires on March 12. Arthur believes that many small banks will collapse if the Fed does not renew the program.
Eventually, the banking collapse would force the Fed to cut down the interest rate during the Federal Market Open Committee (FOMC) meeting on March 20. Thus, according to Arthur Hayes, Bitcoin will start rebounding before the Fed meeting after a healthy correction.
Read more: 2023 US Banking Crisis Explained: Causes, Impact, and Solutions
Moreover, Hayes also shared some factors that can lead to the invalidation of his theory in his essay titled – “Signposts.”
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