Ex-BitMEX CEO announces BTC distribution “in the coming days” in hopes that the good times for crypto will continue until the middle of the year.
And one former risk-averse investor says even emerging altcoins are a solid “buy.”
Industry insider Arthur Hayes announced in a February 8th blog post that he has made a U-turn on his current crypto investment plans.
Hayes changes stance on ‘risky assets’
The current macroeconomic conditions emanating from the United States Federal Reserve have caused Arthur Hayes to avoid what he once called “risky assets”.
As inflation slows in line with the Fed’s interest rate hikes, multiple new storms are brewing in the US and the Fed, Congress and the Treasury will run the economy as they see fit.
The problem is to predict how these events will unfold during the year. For Hayes, 2023 may split 2023, an ideal investment climate for crypto.
This is in contrast to an earlier thesis in mid-January, in which the former CEO of BitMEX said he was sidelined for fear of a Fed-driven capitulation event that would hit risky assets.
“My concerns about this possible outcome, which I probably prevented from happening in 2023, led me to keep my reserve capital in money market funds and short-term US bonds,” he explained.
“Therefore, the portion of my liquid capital that I intend to eventually use to buy crypto is missing from the current monster rally we are seeing at the local low. Bitcoin is up close to 50% from the $16,000 low we saw around the FTX drop.”
Comparing the risky asset landscape to 2009 and the start of QE, Hayes continued that despite the 40% gain in January alone, Bitcoin is probably far from recovering.
This year the picture is complex – quantitative easing has given way to quantitative tightening, which draws liquidity from the US financial system at the expense of risk assets.
However, with some liquidity returning to avoid hitting the debt ceiling too early, H1 appears to provide some relief. That could last until Congress votes to raise the debt ceiling this summer, which Hayes and others say is inevitable.
Up to $500 billion of cash in the Treasury General Account (TGA) would be drained, and the $100 billion in monthly withdrawals from the Fed’s liquidity would be eliminated.
“TGA will end sometime in the middle of the year. Shortly after it’s gone, there will be a political circus around raising the US debt limit,” the blog post predicts.
“Considering the fact that the fiat financial system led by the West will collapse overnight if the US government decides to forgo raising the debt ceiling and instead defaults on the assets underlying this system, it can be assumed that the debt ceiling will be raised.”
The search for macro “relaxation”.
Then the business turns upside down and risky assets can once again become a thorn in the side of any investor.
Related: BTC Price Index, Marking Bitcoin’s Biggest Bull Runs, Breaks $23,000
Hayes believes it’s all about timing. His plan is to move to cash in dollars, with the move to certain risky assets possible. Bitcoin seems to be at the top of the menu.
“I’ll be laying it out in the next few days. I wish my size really mattered, but it doesn’t – so please don’t think that when it does, it will have a noticeable effect on the price of the orange coin,” he told readers.
However, in the concluding part of the blog post, he explains that altcoins represent a great opportunity going forward, which is also due to timing.
“The key to shitcoining is to understand that they rise and fall in waves. First, crypto reserve assets get stronger – namely Bitcoin and Ethereum. The rise in these stocks eventually stops and then prices fall a bit,” Hayes wrote of crypto market cycles.
“At the same time, the shitcoin complex organizes an aggressive rally. Then shitcoins rediscover their appeal and interest returns to bitcoin and the site. And this process of climbing the ladder continues until the global bull market ends.”
According to data from Cointelegraph Markets Pro and TradingView, the overall crypto market cap is up about 34% year-to-date.
Driving the process in 2023, then, is the “opening” of a short window of more harmonious economic conditions now unfolding in the United States.