Bitcoin Bottom Or More Pain? Here’s What Arthur Hayes Thinks


Arthur Hayes, the co-founder of crypto derivatives platform BitMEX and Bitcoin pioneer, spoke about the current state of the market in an interview with Scott Melker.

Despite the threat of a looming recession in the United States, Hayes believes that Bitcoin is in a downward phase. According to him, the origin of the cycle boom is the unrestrained monetary policy.

“If we take a step back and look at why BTC has risen so high because [… ] the largest economy in the world printed the most money they ever did. Obviously a lot of money has flowed into crypto,” the BitMEX founder said.

The excess must be reversed now. In particular, it also contributed to the “conduct of Sam Bankman-Fried, FTX, Kyle, Zhu and all centralized money platforms. All bankrupt and insolvent.”

Bitcoin Bottom Is In

Looking ahead, this is the key bottom line indicator for Hayes, as “almost everyone who could go bankrupt has gone bankrupt”.

Remarkably, the collapsed entities sold Bitcoin and Ethereum first, indicating the health of the market. By contrast, “dog and shitcoins” still remain on their balance sheets because they are super illiquid, Hayes noted.

He added, “if you look at Alameda’s balance sheet, there is no BTC there. They sold Bitcoin while they were going bankrupt. The shit coins are left.”

Here’s another reason why BTC will ring the bell for the end of the bear market, while some altcoins will remain depressed, Hayes claimed:

[Bitcoin is] the purest and most liquid asset, and therefore it will also lead us away from the bottom. And obviously the shitcoins will follow. But there are many bags held by bankrupt companies that need to be liquidated.

But at least for Bitcoin, I am very sure that the biggest, most irresponsible entities sold all the Bitcoins to diamond hands.

In the addendum, the BitMEX founder went on to say that he cannot prove that all the BTC held by these failed entities were sold during the crashes, but it looks like it.

In his recent blog afterHayes added that he currently sees no reason why people shouldn’t hold Bitcoin unless they have a “pressing need for fiat money.”

The Real Test For BTC Will Come In 2024/2025

Looking further into the future, the BitMEX founder believes that BTC will make a comeback next year as the US Treasury and bond markets become dysfunctional sometime in 2023 due to the Fed’s tighter monetary policy.

At that point, Hayes expects the Fed to fire up the money printer. Then, Bitcoin and all other risky assets will explode. However, Bitcoin will serve as an indicator and diverge from the S&P500 ahead.

In addition, the founder of BitMEX does not expect the real test for Bitcoin, a recession, until 2024 or 2025 when he predictions “generation collapse” will occur.

“Hopefully it’s better than the 1930s, but depressed. And then the question is, can Bitcoin outperform 10-year Treasuries and really high inflation?” Hayes said.

Until then, the dollar and BTC markets will be correlated. Whether Bitcoin is truly an inflation hedge and will show any utility then remains to be seen. “That’s the real test,” Hayes concluded.

At press time, BTC has recorded a small loss of 1.1% over the last 24 hours. The price stood at $16,973.

Bitcoin BTC USD 2022-12-12
BTC price, 4 hour chart. Source: TradingView



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