Arthur Hayes believes that the cryptocurrency market will likely take a hit as a result of the Fed’s stance supporting interest rate hikes.
Former BitMEX CEO Arthur Hayes shared his prediction in a depressing Medium post that altcoins could drop 90 percent from the levels they are currently trading.
Hayes also “diamond hands”He claims that in (diamond hands—the type of investor who doesn’t panic and sell their holdings during major price swings) can save Bitcoin from a “catastrophic fall,” and argues that institutional investors won’t be afraid to liquidate their positions in response to changing market conditions.
“They don’t believe in or have any affiliation with Lord Satoshi.”
Despite his pessimistic forecast, the former CEO believes that the two flagship cryptocurrencies Bitcoin (BTC) and Ethereum (ETH) will drop much less compared to alternative coins (altcoins):
“If I am convinced that Bitcoin can trade below $30,000 and Ether below $2,000 in a time frame of three to six months, I will trash all my shitcoins… These shitcoins can go from 75 percent to 90 percent at a real crypto risk. rates may decrease.”
According to Hayes, the US Federal Reserve is increasingly supporting interest rate hikes, making it a strong source of resistance for the cryptocurrency market.
The crypto luminary pointed to the positive correlation between the growth of the Fed balance sheet and the price of Bitcoin. The “printing money” narrative is no longer valid, according to Hayes, because the central bank has persistently turned down the purchase of bonds:
“If M2 is on track to reach 0 percent, and possibly even negative, in the near future, the corollary is that Bitcoin (no asymptotic growth in the number of users or transactions processed over the network) is also on track to drop significantly.”
Hayes says central banks around the world are now committed to tackling inflation, which has emerged as “Public Enemy #1”:
“Villagers; They awoke to the realization that meat, vegetables, taxis, rent and other necessities were increasing faster than their wages.”
The former CEO believes that if the consumer price index (CPI) falls below 2 percent, the Fed will be able to drop its stance of supporting interest rates, which is unlikely.
Hayes also believes the central bank can reverse course if inflation stops being the number one priority before the 2022 US elections in November.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.