Arthur Hayes Anticipates Bitcoin Rally Following Closure of Short Position
Arthur Hayes, the former CEO of the BitMEX cryptocurrency exchange, has recently closed his short position in Bitcoin, which he initially established amid concerns of a potential price correction. On September 6, Mr. Hayes publicly expressed his apprehension that Bitcoin might decline below the significant psychological threshold of $50,000 during the weekend. To capitalize on this anticipated downturn, he opened a short position. However, easing market concerns led him to liquidate this position, and he expressed optimism for a possible Bitcoin rally in the following week, stating on September 8 on social media, “Closed my $BTC short, made 3% profit, enough to cover my food and bar tab for KBW. With Bad Gurl Yellen watching markets and releasing a weekend statement, if stuff continues to puke next week $BTC MIGHT rise anticipating more $ liq.”
Mr. Hayes suggested that an increase in liquidity from the United States Federal Reserve could catalyze a rise in Bitcoin’s price. He noted that current economic weaknesses could compel the Fed to inject liquidity into the market. His commentary on September 7 highlighted this, as he stated, “Bad Gurl Yellen is watching; if markets experience further downturns, she will definitely pump up the jam by printing more money.”
In discussing the M2 money supply, which encompasses all cash and short-term bank deposits in the U.S., Hayes and other analysts such as Jamie Coutts, chief crypto analyst at Real Vision, have pointed to this metric as a potential driver for Bitcoin’s next rally. Coutts remarked in a prior commentary that the correlation between M2 liquidity and Bitcoin’s bullish cycles is significant, indicating that potential increases in the M2 money supply could lead investors to seek out Bitcoin as a hedge against inflation, especially since the M2 supply recently turned positive year-over-year for the first time since November 2023.
Despite the prevailing climate of “extreme fear” among investors due to market corrections, analyst Rekt Capital referenced historical patterns that suggest Bitcoin’s current retracement aligns with previous halving cycles. He reminded stakeholders of Bitcoin’s 7% decline in September 2021, which was followed by a remarkable 39% rally in October of that year. Considering that September historically presents the worst average returns for Bitcoin at -4.69%, the current trends may yet lead to significant upward momentum in the near future.
In conclusion, while investor sentiment may currently favor caution following recent price fluctuations, there exists a compelling argument for a forthcoming rally in Bitcoin, particularly in light of anticipated liquidity injections from the Federal Reserve and historical patterns in market behavior. This perspective underscores the dynamic nature of cryptocurrency investments and the vital role economic indicators play in shaping market expectations.
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