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When will the $70,000 be recovered?
Arthur Hayes says Bitcoin has hit its lowest level: when will the $70,000 be recovered?
CEO of BitMEX, Arthur Hayes has a long history in the cryptocurrency industry. Hayes is a graduate of the Wharton School of Business at the University of Pennsylvania. He started working as an equity derivatives trader in 2008. In 2014, he founded BitMEX, the leading cryptocurrency derivatives platform.
Hayes posted on the BitMEX blog to discuss the current state of Bitcoin and where he sees the price evolving in the future. He focuses in particular on the Federal Reserve and Republic First Bank.
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The Federal Open Market Committee (FOMC) recently announced that it would reduce the rate of quantitative tightening (QT) from $95 billion per month to $60 million per month. This means that they will sell fewer financial instruments on the open market each month. Through this, they can reduce interest rates and stimulate the economy.
Hayes goes on to note that in previous months the FOMC has under-exceeded the QT quota by $95 billion, so it is possible that it will not exceed the $60 billion quota. According to Hayes, this is positive for the liquidity of the US dollar and, therefore, for Bitcoin.
Another potential bright spot for Bitcoin is the collapse of First Republic Bank. Fulton Bank purchased it in late April 2024 and the FDIC approved it as “the lowest cost resolution for DIF.” Essentially, the acquisition was the result that allowed the FDIC to spend the least amount of money on deposit insurance.
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However, as Hayes points out, the FDIC covered more deposits than required by law. The FDIC only insures deposits up to $250,000. However, during the First Republic, the FDIC gave Fulton Bank the liquidity needed to fully insure all deposit accounts. According to Hayes, allowing deposits to go uninsured “is politically unpalatable in an election year, especially if the powers that be have continually assured the public that the banking system is healthy.” So, this decision essentially set a precedent for comprehensive deposit insurance.
If more banks failed, this precedent would inevitably lead to more money printing, as the FDIC would have to borrow from the Fed to satisfy all deposits. To some, this could be seen as reckless, giving more value to Bitcoin’s consistent and predictable supply.
The story continues
To end the post, Hayes summarizes his position in three points:
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Bitcoin hit a low of $58,600.
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Bitcoin will range between $60,000 and $70,000 until August
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Fed and FDIC Stealthily Print Money, Giving Bitcoin More Validity
So, with some evidence from macroeconomic policy and recent events in the banking sphere, Hayes believes it is possible that Bitcoin will rise in the coming months as the effects of recent moves begin to be felt.
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