Arthur Hayes Predicts Bitcoin Correction to $50,000

The price of the leading cryptocurrency could correct to $50,000, with altcoins potentially depreciating even more. This forecast was presented by former BitMEX CEO Arthur Hayes.

According to him, this scenario will remain relevant until the Federal Reserve’s meeting in September.

The pressure factor will persist in the money market, where yields on reverse repo operations o/n with the central bank remain higher than those on U.S. Treasury bills.

“The balance of RRP will continue to grow, and bitcoin will at best fluctuate around current levels, and at worst slowly decline to $50,000,” the expert noted.

The growing balance of reverse repo operations sterilizes money, as they remain inactive on the Fed’s balance sheet, without the possibility of reuse in the global financial system, he added.

The former BitMEX CEO pointed to the risks of U.S. ten-year government bond yields rising to a “dangerous threshold” of 5% annually amid monetary policy easing and a high budget deficit. This threatens problems in the banking and housing sectors and, consequently, could affect voter sentiment.

In such circumstances, Hayes believes that U.S. Treasury Secretary Janet Yellen will do everything to ensure the victory of her Democratic Party colleague Kamala Harris in the upcoming presidential elections in November. To this end, the official might resort to a sharp increase in spending from her department’s account and instruct Fed Chair Jerome Powell to halt QT and possibly initiate QE.

“All these monetary maneuvers are positive for risky assets, especially bitcoin. The magnitude of monetary injections must be large enough to counterbalance the growth of the RRP balance if the Fed continues to lower rates,” the specialist explained.

In Hayes’s view, Yellen must act swiftly, or the situation could escalate into a full-blown crisis of voter confidence in the U.S. economy.

According to the expert, if such a scenario unfolds, interventions will begin at the end of September. Until then, bitcoin will at best continue to fall, and altcoins may sink even deeper “into the gutter.”

Bitfinex has suggested a potential drop in the price of the leading cryptocurrency to $40,000.

Earlier, QCP Capital proposed buying digital gold during corrections in September, with a view to taking profits in October or towards the end of the year, considering its seasonality.