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Arthur Hayes predicts BTC could drop to $50,000

Arthur Hayes predicts BTC could drop to $50,000

GrafaGrafa2024/09/05 01:25
By:Liezl Gambe

Former BitMEX CEO Arthur Hayes has revised his outlook for Bitcoin (CRYPTO:BTC), predicting a potential drop to $50,000 as liquidity conditions tighten. 

In his latest blog post titled “Boom Times… Delayed,” Hayes outlines the economic factors influencing this bearish forecast, marking a shift from his previously bullish stance. 

Hayes highlights the impact of the Federal Reserve’s monetary policies, particularly the role of the Reverse Repo Program (RRP) in draining liquidity from the market. 

The RRP is a tool used by the Fed to control short-term interest rates and manage money supply. 

When RRP balances increase, liquidity is reduced, making risk assets like Bitcoin less attractive. 

Hayes noted, “As soon as the Reverse Repo Program (RRP) started rising to the tune of $120 billion, Bitcoin swooned.” 

He explained that this increase in the RRP rate sterilizes money on the Fed’s balance sheet, limiting its circulation within the financial system. 

Based on Hayes’ analysis, if the Federal Reserve maintains its current stance on interest rates and does not cut rates before the September meeting, the RRP balances are likely to continue rising. 

This scenario could lead to further downside for Bitcoin, with its price potentially declining towards $50,000. 

Hayes expressed concern that if the Fed does not adjust its policy, Bitcoin may “chop around these levels and, at worst, slowly leak lower towards $50,000.” 

Hayes also warns that the broader cryptocurrency market, including altcoins like Ether (CRYPTO:ETH), XRP (CRYPTO:XRP), Cardano (CRYPTO:ADA), Solana (CRYPTO:SOL), and Shiba Inu (CRYPTO:SHIB), could face even steeper declines if Bitcoin's price drops. 

He suggests that these altcoins could experience deeper losses, exacerbating the volatility and potential sell-off in the crypto market. 

“Between now and then, Bitcoin will, at best, continue to chop, and altcoins could dive deeper into the gutter,” Hayes wrote. 

Despite his short-term bearish outlook, Hayes remains optimistic about Bitcoin in the long term. 

He stated that he is not selling his crypto holdings and remains prepared to buy more if prices drop to more favorable levels.

At the time of reporting, the Bitcoin (BTC) price was $57,959.22.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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