Arthur Hayes Predicts Potential 30% Bitcoin Correction

In the coming months, Bitcoin’s price may face a 20-30% correction due to reduced dollar liquidity, warned former BitMEX CEO Arthur Hayes in a statement.

In a Substack article, he outlined potential risks for American banks and markets that could emerge in early spring.

According to Hayes, by early March, the balance of the Federal Reserve’s reverse REPO program will fall to $200 billion—a historical average level he termed “zero.” At the peak of late 2022, this liquidity provision mechanism exceeded $2.5 trillion.

The second factor will be the end of the emergency banking funding program. Banks that received support under this program must find funds to purchase treasury bonds by March 12, the expert noted.

He predicts that the Treasury will not extend the program in an election year. Hayes suggested this could lead to the bankruptcy of several banks. Combined with reduced liquidity, another crisis could impact all financial markets, including the cryptocurrency sector, according to the BitMEX founder.

“I expect Bitcoin to undergo a healthy correction of 20–30% from any level it reaches by early March. The drop could be more severe if U.S.-registered spot Bitcoin ETFs are already trading,” he wrote.

Hayes also noted that the Federal Reserve meeting on March 20 is expected to lower the key rate by 0.25%. Markets estimate a 75% probability of this outcome. The easing of the regulator’s monetary policy could positively affect Bitcoin’s price, the expert believes.

He stated that he “loaded up” on cryptocurrency in the second half of 2023 and does not intend to trade until April due to the identified risk factors.

“I am preparing for a brutal crash of all ‘crypto tourists’ in March this year,” Hayes emphasized.

Analysts at CryptoQuant have also pointed out risks of a Bitcoin correction.