Arthur Hayes, former CEO of BitMEX, said he thinks Bitcoin may be nearing a bottom after a really steep sell-off earlier this week.
Still, Hayes cautioned traders against buying into the market prematurely, saying they should wait for the stock market to fall sharply.
The “weathervane” of liquidity
In a November 17th blog post, Hayes clarified that the crypto market crash was due to a decline in US dollar liquidity, or the amount of currency in circulation in the system.
According to him, the price of Bitcoin primarily reflects expectations about future US dollar liquidity.
Earlier this year, cryptocurrencies managed to rise to all-time highs due to strong ETF inflows, liquidity-focused rhetoric, and massive coin purchases by treasury companies.
But now, liquidity is shrinking again and Strategy’s premium is collapsing. Therefore, Michael Saylor’s company is no longer able to raise capital efficiently.
Will the Fed change course?
Bitcoin’s sharp decline coincided with the possibility of the Federal Reserve cutting interest rates further this year.
However, Hayes believes that a significant stock market correction could lead to a resumption of QE-like liquidity injections.
Once money printing resumes, Bitcoin could soar to $200,000.
Tom Lee of Fundstrat recently predicted that BTC price could reach these prices as early as January 2026.
