Arthur Hayes, a crypto billionaire and ex-CEO of BitMex, has warned that Bitcoin could lose all its gains in the future if it doesn’t change its monetary policy.
Hayes discussed inflation in a blog post on January 19. After a peak of 9% in mid-2022 and a slowing down to 2%, the billionaire observed that CPI has continued its downward trend.
Hayes stated that investors expect the Fed’s rate hikes to be slowed down amid falling inflation to avoid a recession. He said that prognosticators would say that Lord Powell, the Fed’s revered chairman, is seeking every opportunity to shift away from his current Quantitative tightening (QT), policies.
Hayes suggested that the reason for the recent rally in crypto markets could be due to the “resumption” of Fed USD money printing. If this is true, Bitcoin will continue to perform well as the Fed slows rate increases as expected.
However, Bitcoin and other crypto markets could lose all of their gains if the central banks resumes its current Quantitative Tightening policies. Hayes said:
“If the Fed fails to follow through on a pivot or multiple Fed governors downplay any expectation of one, Bitcoin will likely crash down towards its previous lows.”
Former BitMex boss stated that he believes that the Fed will “move to print money, and avert another economic collapse.” If this happens, it will mark the local bottom in risk assets like Bitcoin.
It is important to note that Fed Chair Jerome Powell insists that rates will remain high until inflation reaches that goal. This suggests that a pivot is unlikely simply because CPI has trended lower.
reported that December’s annual inflation rate was 6.5%, down from 7.1% in November. Inflation decreased 0.1% month-over-month compared to 0.1% last month. Core CPI, which doesn’t take volatile food or energy prices into consideration, dropped to 5.7% in November from 6%.
Over the past few weeks, major cryptocurrencies have seen significant gains. Bitcoin soared to more than $23,000 Saturday, an unprecedented level in five months. Ethereum, the second largest cryptocurrency, saw significant gains and also hit a local peak of $1,674 that day. Both coins have increased by more than 30% in the last month.
Hayes stated that the next crypto bull market would begin when China relaxes its stance towards the crypto market. Hayes argued that there are already signs it is happening. One of these is the Hong Kong government’s announcement regarding a bill to regulate cryptocurrency.