Key points:
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Bitcoin should have bottomed at $80,000 last week, according to former BitMEX CEO Arthur Hayes.
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Liquidity conditions are about to turn in favor of cryptocurrency bulls, and the US Federal Reserve is ready to end QT.
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Rumors surrounding future Fed rate cut actions remain highly volatile.
Bitcoin (BTC) should hold support at $80,000 as US liquidity conditions change to boost cryptocurrency bulls.
In his latest X content, Arthur Hayes, former CEO of crypto exchange BitMEX, predicted an incoming BTC price recovery.
Hayes on BTC price: “I think $80,000 holds”
Bitcoin fell more than 35% from all-time highs when it hit its latest bottom of $80,500 last week, but for Hayes, the worst is over.
The reason, he told his X followers, is US liquidity trends. The Federal Reserve is scheduled to end its latest phase of quantitative tightening (QT) next month: its balance sheet will stop shrinking, making way for greater liquidity for cryptocurrencies and risk assets.
“Minor improvements to the $liq,” he summarized.
Hayes predicted that the Federal Reserve’s balance sheet should stop shrinking after this week, although he noted that bank lending increased in November.
For cryptocurrencies, the knock-on effect should be clear: a classic rising tide of liquidity driving Bitcoin and altcoins.
“We went down below $90,000, maybe one more stab towards the low $80,000s, but I think $80,000 holds,” Hayes continued.
The former BitMEX executive has remained bullish throughout Bitcoin’s decline from its October record, and earlier this month reiterated the need for quantitative easing (QE) to return to increase pressure on BTC prices.
Last week, he added that stocks needed to “vomit” in a similar way to cryptocurrencies before the recovery occurred.
“We are playing to print more money, and for that we need AI technology stocks to sink,” he concluded.
From hawkish to moderate in an instant
Market expectations of the Fed’s changes in financial policy have fluctuated considerably during the US government shutdown and afterward.
Related: Death Cross vs. $96,000 Bounce: 5 Things You Should Know About Bitcoin This Week
Amid the lack of macroeconomic data, it was difficult to place bets on another interest rate cut at the Federal Reserve’s December meeting.
The latest data from CME Group’s FedWatch tool puts the odds of a 0.25% cut at around 79% as of Monday, compared to just 42% a week ago.
The volatility did not go unnoticed in professional circles. Economist Mohamed El-Erian described the phenomenon as “stunning.”
“This kind of wild volatility is the opposite of the ‘predictability and stability’ the Fed typically seeks, especially as the central bank at the center of the global payments system,” he argued on X that day.
“It is the result of data altered by the shutdown, a dual-term restriction, an outgoing presidency and the lack of a clear strategic framework by the world’s most powerful central bank, which has been overly reliant on data for a prolonged period.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risks, and readers should conduct their own research when making a decision.
