Key Points
- Bitcoin’s market trajectory is expected to improve from September, according to BitMEX founder Arthur Hayes.
- Hayes’s prediction is based on an anticipated increase in US liquidity towards the end of the year.
Arthur Hayes, the founder of BitMEX, has predicted a positive shift in Bitcoin’s market trajectory starting from September.
Since April, Bitcoin has been fluctuating between $60K-$70K, with occasional drops below $60K. This period has seen most altcoins experience significant sell-offs, with some falling over 50%.
Hayes’s Prediction Based on US Liquidity
Hayes’s prediction is based on an expected increase in US liquidity (money supply) towards the end of the year.
He has followed key monetary tools like US Treasury bills (T-bills) issuance and the Fed’s RRP (Reverse Repurchase Agreement) to provide an overview of the historical impact of US liquidity on Bitcoin.
T-bills are securities offered by the government to raise money needed to fund its fiscal deficits. More T-bill issuance increases the money supply for government spending and boosts liquidity, while a decline in issuance drains liquidity.
RRP, on the other hand, is a monetary tool used by the Fed to control the supply of money in circulation. It’s issued to banks, allowing them to offer loans to the Fed. An increase in RRP volume means reducing liquidity.
Between April and June 2024, there was a net negative T-bill issuance, resulting in reduced US liquidity.
Hayes attributes this to the subdued price action of Bitcoin and the crypto market.
Correlation Between T-Bills, RRP, and BTC Price Action
Hayes noted a close correlation between T-bills, RRP, and Bitcoin’s price action. When T-bills issuance increased in Q1, it coincided with a drop in RRP, and Bitcoin reached record highs in March.
However, since April, the opposite trend has been observed.
“From April to July, when T-bills were net withdrawn from the market, RRP rose, and Bitcoin traded sideways, punctuated with a few intense dips,” Hayes noted.
The US Treasury is expected to net-issue $301 billion in T-bills between now and the end of the year. According to Hayes, this would increase liquidity and push Bitcoin to $100K.
Increased liquidity would also boost altcoins and trigger the elusive altcoin season. However, Hayes projected that Alt season would only occur if Bitcoin decidedly broke above $70K and Ethereum climbed above $4K.
Hayes also predicted that SOL could rally above $250, providing a market-wide relief to the altcoin market.
Given the liquidity outlook, Hayes plans to buy during Summer dips and sell off at the peak of the October pump before the November US election.
