Key Points
- BitMEX co-founder Arthur Hayes predicts a short-term Bitcoin price drop to $70K-$75K, due to rising U.S. Treasury yields and inflation.
- Despite the potential correction, Hayes forecasts a rise to $250K by year-end, driven by quantitative easing responses to financial distress.
Arthur Hayes, co-founder of BitMEX, has issued a warning about a potential short-term drop in the price of Bitcoin (BTC). He predicts a 30% correction that could see the cryptocurrency fall to between $70,000 and $75,000.
Potential Causes for Correction
Hayes attributes this potential dip to rising 10-year Treasury yields and their probable impact on both stocks and crypto. Increased Treasury yields typically signal tighter liquidity, making riskier assets like stocks and crypto less appealing than bonds. This could negatively affect the crypto market, particularly Bitcoin.
Furthermore, Hayes suggests that inflation is likely to rise in the near future as the world’s economies decouple. This, he believes, will lead to a rise in 10-year yields and a subsequent drop in stock prices. Given the strong correlation between U.S. stocks and Bitcoin, such a decline could also impact the leading cryptocurrency.
Long-Term Outlook
Despite the predicted short-term correction, Hayes remains optimistic about Bitcoin’s longer-term prospects. He suggests that any financial distress caused by these factors would likely prompt the U.S., China, and Japan to respond with quantitative easing (QE). Hayes believes there is a 60% chance of a QE pivot occurring in the first or second quarter, which could drive Bitcoin’s price up to an all-time high of $250,000.
Furthermore, Bitcoin’s ‘Everything Indicator,’ which measures miner profitability, money supply, and network growth, suggests that the cryptocurrency is only halfway through its bull run. Historically, a reading above 80 on this indicator has marked the tops of previous cycles in 2017 and 2021. The current reading is above 50, indicating there is still room for growth.
