Crypto billionaire and former CEO of BitMEX, Arthur Hayes, has warned that bitcoin could regain all of its recent gains if the Federal Reserve does not pivot on monetary policy.
In a January 19 blog post, Hayes talked about About inflation and how it can affect the crypto market. The billionaire said the CPI figure is trending downwards towards the 2% target after peaking at around 9% in mid-2022.
Hayes said investors expect the Fed to slow rate hikes amid declining inflation, especially to avoid a recession. “Those forecasters will argue that our respected Lord Powell is looking for every opportunity to move away from his current quantitative tightening (QT) policies,” he said.
Hayes then argued that one of the reasons behind the recent rally in the crypto market could be the “resumption of Fed USD money printing”. If this is the case, bitcoin will continue its strong run as the Fed slows down on rate hikes as expected.
On the other hand, if the central bank resumes with the current quantitative tightening (QT) policies, bitcoin and the broader crypto market could wipe out all their recent gains. Hayes said:
“If the Fed does not follow through on the pivot, or any hopes of a pivot are dampened even after multiple Fed governors “good” CPI prints, bitcoin could slide back towards previous lows.
The former BitMEX boss said he believes the Fed will “move to print money and prevent another financial collapse.” And if it does, it will mark a local bottom for risk assets like bitcoin.
It’s worth noting that Fed Chair Jerome Powell has insisted that rates will remain high until inflation reaches that target, suggesting that a pivot is unlikely simply because CPI is running low. .
As ReportedThe annual inflation rate fell to 6.5% in December, compared to 7.1% in November. Month-on-month, inflation declined by 0.1% compared to an increase of 0.1% in the previous month. Core CPI, which does not take into account volatile food and energy prices, fell to 5.7% from 6% in November.
Major cryptocurrencies have registered significant gains in the past weeks. Bitcoin soared above $23,000 on Saturday, a level not seen in more than five months. Ethereum, the second largest cryptocurrency, also registered significant gains, reaching a local high of around $1,674 on the day. Both the coins have gained more than 30% in the last one month.
Back in October last year, Hayes said the following crypto bull run will begin When China eases its stance towards the crypto market. He argued that there are signs that this is already happening, one of which is the announcement by the Hong Kong government, which is “the proxy through which China interacts with the world,” about a bill to regulate crypto. in.
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