Despite the recent market crash, Arthur Hayes, the founder of BitMEX, a cryptocurrency derivative exchange, wrote today that the recent changes in US monetary policy, equivalent to secret printing of money, will increase huge liquidity in the financial system every month, causing the currency market to hit bottom and slowly recover.
(Previous summary:
Arthur Hayes: US Treasury will inject $1.4 trillion into the market to boost the return of the crypto bull market in May.)
(Background supplement:
Arthur Hayes’ latest article: Printing money will accelerate, I am increasing my position… the crazy bull market is not over yet.)
BitMEX founder Arthur Hayes wrote today that there are several reasons leading to the recent market crash, including: the US tax season, market panic about the actions of the Federal Reserve, “sell the news” triggered after the Bitcoin halving, and the slowdown in the asset management scale of the US Bitcoin spot ETF.
Changes in US monetary policy affecting the currency market
However, Arthur Hayes stated that the recent changes in US monetary policy will soon help boost the currency market.
First, the Federal Reserve decided at this week’s interest rate decision meeting to slow down the monthly tapering speed from $95 billion to $60 billion, which essentially adds $35 billion of liquidity each month.
According to the latest quarterly refunding report from the US Treasury, in order to meet the funding needs by the end of May, short-term government bonds with 4-week, 6-week, and 8-week maturities will be issued, which is expected to add additional US dollar liquidity to the market.
In addition, Arthur Hayes pointed out that the United States is currently experiencing fiscal pains. The statement by US Treasury Secretary Yellen is more important than any other monetary official’s statement. The US Treasury publishes quarterly refunding reports to guide the market, specifying the quantity and type of bonds that the government needs to issue for financing.
Arthur Hayes also mentioned that the recent bankruptcy of Republic First Bank, a small US bank, means that the authorities have guaranteed all deposits in the US banking system through the Federal Deposit Insurance Corporation (FDIC) to avoid affecting the election. This means that the US authorities have effectively added $6.7 trillion in contingent liabilities to the entire banking system.
Positive outlook for the currency market rebound
Therefore, Arthur Hayes concluded that the recent policy statements by the Federal Reserve and the US Treasury, like secret printing of money, will gradually reduce the negative changes in currency market prices. It is expected that the currency market will hit bottom, oscillate, and slowly rise from now on.
As for investments, Arthur Hayes said that the recent selling wave provided him with excellent opportunities to unlock USDe and then use these synthetic dollars to buy high beta value altcoins. He will buy Solana and dog series coins for short-term trading.
Regarding long-term holdings of altcoin positions, Arthur Hayes stated that he will increase his position in Pendle and look for other discounted coins. In the remaining time of May, he will increase his exposure and set stop-loss points, waiting for the market to realize the inflationary effect of recent US monetary policies.
Arthur Hayes predicts that Bitcoin will bounce back above $60,000 and then consolidate between $60,000 and $70,000 until August.
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