Arthur Hayes Predicts Bitcoin Volatility Around Halving Event

In the medium term, the halving is a bullish catalyst for the crypto market. However, prices may decline immediately before and after the event, according to former BitMEX CEO Arthur Hayes.

“Heatwave” is an essay on why I’m bearish despite the recent move higher in #crypto markets.https://t.co/gZ8Vl1uC04 pic.twitter.com/fH6docB499

— Arthur Hayes (@CryptoHayes) April 9, 2024

“The narrative that halving the block reward will positively impact cryptocurrency prices is firmly entrenched. When most market participants agree on a certain outcome, the opposite usually happens,” the expert stated.

He noted that in the second half of April, the market will face a reduction in dollar liquidity. The reasons will be the tax payment season, the Fed’s policy of quantitative tightening (QT), and the strengthening of the Treasury’s balance sheet.

This factor will serve as an additional impetus for a “fierce sell-off in cryptocurrencies,” Hayes believes.

“Can the market challenge my bearish tendencies and continue to rise? Hell yes. I’ve been in crypto for a long time, so I welcome being wrong,” he admitted.

The expert expects that after May 1, the Fed will slow the pace of QT, and the Treasury will likely inject an additional $1 trillion of liquidity into the system, which will boost the markets.

Hayes added that the “set of tricks” from regulators only strengthened his decision to refrain from trading bitcoin until the aforementioned date.

“If I miss a few percentage points of profit but definitely avoid losses to my portfolio and lifestyle, that’s an acceptable outcome,” the trader stated.

He reported that he “realized full profit” on positions in MEW, SOL, and NMT, which he invested in USDe from Ethena for staking.

Earlier, the DeFi project implemented Hayes’s ideas in the mechanism of its “synthetic dollar.”