Bitcoin And Altcoin Bull Run Will Return, Arthur Hayes Reveals Timeline
August 13 2024 - 1:00PM
NEWSBTC
In a new essay, Arthur Hayes, the co-founder of crypto exchange
BitMEX, has outlined a bullish future for Bitcoin and altcoins. His
analysis, focused on the interplay between government liquidity
operations and asset prices, suggests a looming bull market in the
crypto space, driven by strategic fiscal maneuvers by the US
Treasury. When Will The Bitcoin Bull Run Return? Hayes compares the
quality of water in brewing coffee to the liquidity in financial
markets, illustrating that just as the quality of water is crucial
for making a good cup of coffee, liquidity is essential for the
health and movement of financial markets. Hayes pointed out that
many investors underestimate the impact of liquidity and often
focus narrowly on more visible factors like technological
advancements or regulatory changes. Hayes explains the concept of
“fiscal dominance,” a situation where the government’s need to
finance itself supersedes all other economic considerations,
including the control of inflation. He specifically critiques the
current policies under US Treasury Secretary Janet Yellen, whose
tactics, according to Hayes, focus on generating nominal economic
growth regardless of the inflationary outcomes. Related Reading:
BTC’s Next Objective? Analyst Eyes Crucial $70,000 Resistance Zone
For Bitcoin “During a period of fiscal dominance, the necessity to
fund the state overrides any concerns the central bank may have
about inflation,” Hayes explains. He details how this shift impacts
liquidity, stating, “That means bank credit and, by extension,
nominal GDP growth must be sustained at high levels even if it
results in persistently higher than target inflation.” Drawing a
direct connection between Treasury actions and crypto market
movements, Hayes highlighted the correlation between the issuance
of Treasury bills (T-bills) and Bitcoin price movements. He noted
that when the Treasury increases T-bill issuance, it effectively
shifts liquidity from instruments like the Reverse Repo Program
(RRP) into more active uses, which historically corresponds with
increases in Bitcoin prices. “As the RRP (white) fell from its
high, Bitcoin (gold) pumped off the lows. As you can see, it’s a
very tight relationship. As money leaves the Fed’s balance sheet,
it adds liquidity, which causes […] Therefore, taking Bad Gurl
Yellen’s word, we know that $301bn of T-bills will be net issued
between now and year-end. If this relationship holds true, Bitcoin
will quickly retrace the dump caused by the yen strengthening. The
next stop for Bitcoin is $100,000″ Hayes speculates. When Altcoin
Season? Therefore, Hayes advises crypto traders to pay close
attention to fiscal and monetary policies, especially the actions
of the US Treasury, as these are often precursors to significant
market movements. Monitoring T-bill issuance and Treasury maneuvers
can provide crypto investors with clues about upcoming shifts in
market liquidity and potential price movements, according to Hayes.
Related Reading: Bitcoin Investors Again Show Extreme Fear As BTC
Slips To $59,000 Shifting focus to the broader crypto market, Hayes
also discusses the potential for an ‘alt szn’ or altcoin season,
which he predicts will follow a rally in Bitcoin and Ethereum
prices. “Shitcoins are higher beta Bitcoin crypto plays. But during
this cycle, Bitcoin and now Ether have structural bids in the form
of net inflows into US-listed exchange-traded funds (ETF). While
Bitcoin and Ether have corrected since April, they escaped the
carnage experienced in the shitcoin markets.” Commenting on the
potential of a full blown altcoin season like in previous cycles,
Hayes assures that the time will come. However, altcoin season will
only return after Bitcoin and Ether “decidedly break through
$70,000 and $4,000, respectively.” He adds, “the combination of a
dollar liquidity-inspired Bitcoin and Ether rally into year-end
will create a strong foundation for the return of a sexy shitcoin
soiree.” Interestingly, Hayes plans to capitalize on the US
elections. He expects that the crypto bull run will exit its
“sideways-to-downward trajectory” in September. “The US election
occurs in early November. Yellen will be at peak manipulation in
October. There will be no better time for liquidity this year.
Therefore, I shall sell into strength. I will not liquidate my
entire crypto portfolio but take profits in my more speculative
momentum trades,” he revealed. Hayes further anticipates a more
substantial market adjustment post US election and the US debt
ceiling resolutions, “Once the US debt ceiling charade is over,
liquidity will gush from the Treasury and possibly the Fed to get
markets back on track. Then, the bull market will begin for realz.
$1 million Bitcoin is still my base case.” At press time, BTC
traded at $58,783. Featured image from YouTube, chart from
TradingView.com
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