Arthur Hayes, ex-CEO of crypto derivatives platform BitMEX, believes that the worst may already be over for Bitcoin (BTC) this cycle, as the “biggest, most irresponsible entities” have run out of BTC to sell.
“Looking ahead, almost everyone who could go bankrupt has already gone bankrupt,” he said in the December 11 interview with the cryptocurrency advocate and podcaster; Scott Melker.
Hayes elaborates on his stance by explaining that when centralized lending companies run into financial trouble, they often they will ask for loans first, then they sell BTC first because it operates as the “reserve asset” and “the most pristine and most liquid asset”:
“When you look at the balance sheet of any of these of the heroes, there’s no Bitcoin on it because what do they do, they sold Bitcoin while they went bust, they sold Bitcoin during the wave before they went bust.”
Hayes made a similar argument in a blog post on Dec. 10, explaining that while this “credit crunch is underway,” large physical sales of BTC are taking place on exchanges, both from centralized lending companies trying to avoid bankruptcy and from commercial companies that have had loans withdrawn and must liquidate their positions.
Let’s try this again.
In “PEMDAS” I argue that $BTC has bottomed, and then talk about which type of #crypto‘s I will hold while waiting for the money printer to go brrr once more. https://t.co/JNAQ7VK0Ec pic.twitter.com/IV4Td1UTda
— Arthur Hayes (@CryptoHayes) December 9, 2022
“That’s why the price of Bitcoin crashes before the central lending companies go bankrupt. That’s the big move,” it states:
“I cannot demonstrably prove that all of the Bitcoin held by these failed institutions was sold during the multiple crashes, but it does appear that they went to great lengths to liquidate the most liquid crypto collateral they could just before the crash.”
However, Hayes believes that large-scale sell-offs have come to an end, explaining in the blog post that “There is no reason to hold on if you have an urgent need for fiat.”
Following the collapse of the FTX cryptocurrency exchange and the ensuing consequences, the market remains in the grip of the bear market, but Hayes believes that the market could see some recovery in 2023.
“I think the US Treasury market will become dysfunctional sometime in 2023 due to the Fed’s tight monetary policies,” he said, adding: “At that point, I expect the Fed to turn on the printers, and then boom shaka-laka – Bitcoin and all other risk assets will skyrocket higher.”
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