Arthur Hayes, the CEO-turned-cofounder of BitMex who is also the Chief Investment Officer at Maelstrom, said that the next bull market will commence towards the end of the year. Hayes made the assertion in a blog post on Friday, June 2.
Hayes bases his assertion on his belief that the price of bitcoin is influenced by both the supply of paper currency in circulation and technology. Hayes reiterated that inflation rates would gradually rise again.
More Fed interventions coming
He added that this June, the Fed might choose to stop its rate hikes only to return and increase interest rates at their meeting scheduled for July. The analyst is confident of a high probability for policy rates to hit close to 6%, and if the interest rate rises, then the amount paid out as interest will increase for both RRP and IORB balances.
Finally, depositors will keep moving money into money market funds or from non-Too Big to Fail (TBTF) banks to TBTF institutions. While TBTF banks will keep money in the IORB, money market funds will keep it in the RRP. RRP and/or IORB balances increase in both scenarios. Because TBTF banks have plenty of cash, they pay little to no interest on deposits and deposit any additional funds they get with the Fed (which is why IORB has increased). In order to pay interest on money parked at these facilities, the Fed must issue more money as a result.
Excess liquidity will favor high risk assets
Hayes wrote that, all things considered, the daily injection of USD liquidity into the system will increase. Because interest rates rise as balances rise, the rate at which USD liquidity injections fluctuate will also quicken. The development of compound interest is geometric.
Noting that the price of bitcoin dropped by almost 10% from its April highs. The entire amount of interest given to wealthy asset holders functions as a stimulus program. When affluent asset owners have more money than they need, they invest in risky assets. Beneficiaries of this “wealth” that the government prints and distributes as interest include gold, bitcoin, AI tech stocks, and others.
Plans to increase his Bitcoin stash
He asserts that Bitcoin will remain stable in the meantime, above the $20,000 mark. A solid basis of support will develop as money progressively seeps into the world’s risky asset markets.
He said he is not surprised that degens beset by boredom have temporarily stopped trading cryptocurrencies because volatility and trade volumes always disappoint during the northern hemisphere summer. However, he intends to take advantage of the calm to gradually raise his allocation to Bitcoin.
Bitcoin won’t drop below $20k in the short term
Hayes said that he believes that Bitcoin will maintain its position. However, he doesn’t believe we will reach the $20k mark again or even come close. As the inflow of capital slowly trickles into the global market for risky assets, we can expect to see a strong foundation of support taking shape, despite traders struggling with boredom and temporarily abandoning crypto trading due to reduced volatility and lower trade volumes, which are typical of summers in the northern hemisphere. I am planning on using this calm moment to incrementally increase my distribution into Bitcoin once the TGA has been replenished.
It will once again become common knowledge that the money printer is going broke as more and more pundits discuss what is happening to the billions of dollars printed by the Fed and US Treasury and distributed as interest. Bitcoin explodes when the printer makes a loud noise.