Arthur Hayes Anticipates 20-30% Bitcoin (BTC) Correction

BitMEX founder Arthur Hayes foresees an initial sharp decline in the price of Bitcoin (BTC) followed by a continued bull market.

In his essay dated Jan. 5, Hayes anticipated economic events impacting the BTC value. He predicts a potential 30% decline in the cryptocurrency’s price in March 2024. The upcoming halving and the injection of money post the US election are identified as factors influencing Bitcoin’s growth.

Key events for Bitcoin and the economy in 2024

The Fed meeting in March

Arthur Hayes closely monitors the Federal Reserve (Fed) meetings on March 20. Market forecasts hint at a potential rate change. The prevailing wisdom suggests that the Fed might initiate its first rate hike, possibly at least 0.25%, following a similar move in March 2021.

As of Jan.3, he indicated a 75% likelihood of a reverse scenario to the anticipated rate hike—an expected 0.25% rate cut, aligning with market expectations.

Additionally, Hayes predicted that the Reverse Repo Program (RRP) will decrease to $200 billion by March, essentially approaching zero. This projection raises questions within the market about what will transpire next.

U.S. election

With the U.S. election year in 2024, there’s a chance the government may initially opt not to reintroduce the Bank Term Finance Program (BTFP), reflecting confidence in economic stability.

However, Hayes suggested this scenario could shift if certain sizable non-Too Big To Fail (TBTF) banks encounter governance risks with their capital nearing zero. In such circumstances, the government might reassess and modify the updated BTFP, offering financial support to these banks through additional cash releases.

With the BTFP set to expire on Mar. 12 and the anticipated Fed rate decision on Mar. 20, there are six trading days in between. If the predicted bank failures materialize during this timeframe, Hayes proposed that the Fed might respond by lowering rates and reinstating the BTFP. This action aims to stabilize the financial system and prevent potential crises.

Bitcoin price prediction in 2024

Bitcoin’s price is anticipated to experience an initial decline followed by a subsequent rise, particularly preceding a potential Federal Reserve response involving the “money printer.”

Arthur Hayes predicted a 20-30% correction from the current level by early March. A more substantial correction becomes plausible, especially with the potential approval and introduction of spot Bitcoin ETF to the market.

Considering the likelihood of reduced dollar liquidity, the scenario envisions a 30-40% correction. Consequently, Hays is exercising caution in buying Bitcoin until the March events unfold.

Forecasts indicate the potential injection of significant fiat funds into these ETFs, potentially propelling Bitcoin beyond $60,000, nearing the record high of $70,000 established in 2021.

Also influencing the continuation of the bull market will be the approaching bitcoin halving in April. Traditionally, the value of the cryptocurrency rises on the back of news of this event.

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