BitMEX founder Arthur Hayes is outlining the most likely paths forward for Bitcoin (BTC) after the king crypto’s rapid 30% rally.
In a new Medium post, Hayes says where BTC is headed next depends on what’s driving the recent surge.
Hayes says, if the surge is a “natural” bounce off recent lows, Bitcoin is likely to trade sideways at a new higher price level until financial market conditions improve.
“Rally Catalyst Scenario 1: Bitcoin is simply experiencing a natural bounce off the local lows of sub $16,000. If this rally is really just a natural rebound off of local lows, I expect that Bitcoin will subsequently find a new plateau and move sideways until USD [US dollar] liquidity conditions improve.”
However, Hayes says the Federal Reserve policy is likely the main cause for Bitcoin’s price surge with investors anticipating a Fed pivot on continuing to raise interest rates. If the Fed pivots, Bitcoin will continue to rise in value, but if the pivot fails to arrive Bitcoin’s price will collapse, according to Hayes.
“Rally Catalyst Scenario 2: Bitcoin is rallying because the market is frontrunning a resumption of Fed USD money printing. If this is the case, I see two possible scenarios playing out:
Scenario 2A: If the Fed does not follow through with a pivot, or multiple Fed governors talk down any expectation of a pivot even after ‘good’ CPI [Consumer Price Index] prints, Bitcoin will likely crash back down toward previous lows.
Scenario 2B: If the Fed does follow through with a pivot, Bitcoin continues its strong performance, and this rally becomes the start of a secular bull market.”
Hayes believes “scenario 2” is more likely.
He also says, if his scenario 1 is right, then Bitcoin will trade sideways at the new recent high. Then, when investors anticipate a Fed pivot they will send the flagship cryptocurrency into the $30,000 to $40,000 range. He says another rally will come after the Fed actually pivots, sending Bitcoin beyond its all-time high price “once a significant amount of USD has been injected into the crypto capital markets.”
But if his “disastrous” scenario 2A transpires, Hayes forecasts Bitcoin to dip to $15,800 or lower.
“It doesn’t really matter what level is ultimately reached on the down draft because I know the Fed will subsequently move to print money and avert another financial collapse, which will in turn mark the local bottom of all risky assets.
And then I get another setup similar to March 2020, which requires me to back up the truck and purchase crypto with two hands and a shovel.”
At time of writing, Bitcoin is changing hands for $20,879.
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