Key Points
- BitMEX co-founder Arthur Hayes predicts Bitcoin’s rally to $70,000 due to ‘stealth money printing’.
- Hayes believes the slow addition of liquidity will dampen negative price movements in the future.
Arthur Hayes, the co-founder and previous CEO of BitMEX, who currently oversees a family office called Maelstrom, anticipates a return of Bitcoin to $60,000.
He then expects it to fluctuate between $60,000 and $70,000 until August.
Stealth Money Printing
In a recent blog post, Hayes proposed that the gradual infusion of billions of dollars of liquidity each month would suppress future negative price movements.
He contradicts the popular belief about market seasonality by advising to “buy in May, go away.”
Hayes contends that the latest Federal Reserve and U.S. Treasury policy announcements are subtle instances of money printing.
While the crypto market may not immediately respond to this, he predicts that prices will “bottom, chop and begin a slow grind higher.”
Bitcoin’s Recent Performance
Bitcoin fell to a low of $56,500 on Wednesday, a 23% decrease from a record high of $73,836 set on March 14.
It is currently being traded for $59,568.
Earlier this year, Hayes speculated that the crypto market might experience a significant correction in March due to intersecting macroeconomic factors.
Hayes explained his reasoning by highlighting the Fed’s recent announcement that it would decrease the rate of quantitative tightening from $95 billion to $60 billion per month.
This effectively adds $35 billion per month of dollar liquidity.
Furthermore, Hayes drew attention to the US Treasury’s recent quarterly refunding announcement, which outlined the amount and type of debt issuance needed to fund the government.
Over the next two quarters, the U.S. Treasury plans to borrow more money than previously estimated.
He also pointed out the recent closure of Republic First Bank, the first U.S. bank failure this year, which was acquired by Fulton Bank.
Fulton agreed to the acquisition only if the Federal Deposit Insurance Corporation (FDIC) provided it $667 million to ensure all Republic First depositors could be compensated.
In light of the U.S. election in November, Hayes suggested that the government would effectively guarantee all deposits in the U.S. banking system.
This would be a stealth addition of $6.7 trillion, as this is the amount of uninsured deposits as reported by the St. Louis Fed.
“This results in money printing because the FDIC’s insurance fund doesn’t have $6.7 trillion… Once the fund is exhausted, the FDIC will borrow money from the Fed, which will print money to satisfy the loan,” he added.
