Arthur Hayes – co-founder of BitMEX – just gave an interesting Bitcoin price prediction in his bi-weekly analysis. Although he expects the Federal Reserve not to raise interest rates, he still doubts that Bitcoin’s bottom will come as far as a retest of $28,500.
Calling the Fed’s Bluff
In BitMEX’s latest post from Crypto Trader Digest titled “Bottomless,” the former CEO extols cryptocurrencies as the “last free market on earth”. He explained that due to “wanton” money printing, large banks and governments are able to capture other asset prices at “politically expedient levels”.
Afterwards, he acknowledges that while cryptocurrencies have fallen significantly in recent weeks, the Federal Reserve hasn’t even raised rates yet. Therefore, he suspects there could be more carnage to come in the markets when the March rate hike actually happens.
However, he also expressed doubt as to whether the Fed actually has the ability to raise rates without blowing up the markets.
“If the Fed has publicly stated that it will reduce the size of its balance sheet, how can it maintain its commitment to support private issuers?” said Hayes. “The market woke up to this inconsistency, and yields started a small break to the upside.”
Hayes predicts the Fed will opt to continue easy monetary policies out of political expediency, despite its claims to the contrary. As history has proven, news of rising inflation tends to be a positive for Bitcoin’s price.
Another FOMC meeting will take place later today, which the markets are eagerly awaiting. Hayes suggests investors don’t wait for the Fed to announce they’ve changed their minds and expect crypto to pick up “long before” that.
Floor Below $29k?
Hayes sees Bitcoin’s next true resistance level at $28,500 – approximately where it bottomed in July of last year. Should this level be broken, he expects a liquidation cascade that could possibly take Bitcoin back down to $20k – its 2017 high.
“If any of the previous Bitcoin 2017 and Ether 2018 ATHs ($20,000 and $1,400 respectively) are breached on a daily candle, then I don’t even want to think about it,” he said.
Bitcoin is currently trading above $38k – a significant rebound from its low at $33k days ago.
