Prominent analyst and former BitMEX CEO Arthur Hayes warns of a potential 40% drop in Bitcoin prices in March, citing upcoming financial market turmoil. In a blog post on January 4, Hayes alerted readers to brace for a chaotic week that could deeply impact financial markets.
Investors are feeling secure as the U.S. prepares for its first spot Bitcoin exchange-traded funds (ETFs), which are awaiting regulatory approval. The upcoming Bitcoin halving event in April, alongside broader acceptance and institutional money, could be pivotal for Bitcoin’s price increase.
However, Hayes cautions that the trajectory is not guaranteed to be consistently upward, attributing potential instability to the U.S. Federal Reserve’s efforts to stabilize an economy grappling with reducing inflation.
A critical moment looms in March when the Federal Reserve’s Bank Term Funding Program (BTFP) ends, followed by a crucial Federal Open Market Committee (FOMC) decision on interest rates. Hayes predicts market turmoil between these events, potentially forcing bank failures and a Fed response to lower interest rates and reinstate BTFP.
Bitcoin and the crypto market’s sensitivity to macro liquidity changes could benefit from a Fed move, but this may only happen after the initial shock caused by 2023’s volatility. Hayes suggests holding off on Bitcoin purchases until after these decisive March dates, anticipating a significant correction.