Arthur Hayes Predicts Intense Sell-Off Around Bitcoin Halving

Arthur Hayes, co-founder of the cryptocurrency exchange BitMEX, has voiced concerns that the upcoming Bitcoin halving event, alongside monetary policy actions from the U.S. Federal Reserve and Treasury Department, may trigger a sharp downturn in the cryptocurrency market. The halving, scheduled for April 20, typically cuts the reward for Bitcoin mining by half, an event that historically has led to price increases in the medium term. However, Hayes points out that the timing of the halving could lead to immediate negative impacts due to tighter dollar liquidity.

The latter half of April is forecasted to be particularly challenging for cryptocurrencies and other risky assets. Hayes attributes this to several factors: U.S. tax payments are expected to reduce dollar liquidity in the market, the Federal Reserve is set to begin Quantitative Tightening (QT), which will decrease the money supply, and the Treasury’s General Account (TGA) has not yet been utilized.

Hayes predicts that after May 1, following a meeting by the Federal Reserve, there may be a deceleration in the pace of monetary tightening. This could be accompanied by a release of approximately $1 trillion of liquidity into the system from the Treasury’s General Account, potentially creating a more favorable environment for the markets. Despite Hayes' warnings of a potential downturn, other market analysts have suggested that the cryptocurrency could experience a rally, leading to new highs in Bitcoin's value.