Bitcoin and other risk assets to correct? BitMEX Founder Warns…

by James · February 28, 2023

A massive cryptocurrency price correction is reportedly on the way, but it could be followed by a sustained bull run.
Bitcoin and other risky assets are likely to experience a massive correction soon.

Arthur Hayes, co-founder and former CEO of cryptocurrency derivatives exchange BitMEX, has warned that a massive cryptocurrency price correction is on the way, but that it will be followed by a sustained bull run.

Hayes was speaking during a Crypto Banter interview when he said that Bitcoin [BTC] and other risky assets are likely to experience a massive correction in the near future as a huge amount of liquidity disappeared from the market.

Also, in a recent blog post, Hayes stated that the United States will likely raise the debt ceiling this year and issue $1.1 to $1.2 trillion in government bonds to finance the USG Federal Deficit in 2023, which the Congressional Budget Office estimates to be around those numbers.

Hayes also mentioned in his post that as the Treasury sells off loans, the Federal Reserve remains committed to reducing its holdings of US Treasuries by $100 billion per month, which he argues poses a risk to assets by depriving the market of significant liquidity.

According to Hayes, the flood of Treasury debt into the market, combined with the Federal Reserve’s ambiguous messaging, has created an environment of uncertainty and caution for investors. Hayes advised his readers to keep a close eye on the market and be ready to act quickly.

Hayes stated that the Treasury General Account (TGA) is a critical indicator to monitor because it will indicate when the government has exhausted its cash reserves and is approaching the debt ceiling.

Bitcoin remains tied to global risk assets

Hayes stated in the interview that Bitcoin has not truly escaped its correlation with global risk assets, and he believes it is due to a correlation one day, implying that everything, including Bitcoin, will crash massively.

While the CEO of BitMEX acknowledges that while BTC has the potential to break the $20,000 mark, he believes that a further decline is plausible. He remains optimistic about Bitcoin’s long-term prospects, especially considering the response of monetary and fiscal authorities in times of economic distress.

Hayes believes that if there is another economic downturn, governments will pump money into the economy and print more currency, further increasing the value of Bitcoin. Furthermore, Hayes claims that both Bitcoin and Ethereum [ETH] will maintain its upward momentum before alternative cryptocurrencies go “vertical”.