BitMEX crypto exchange founder names the reason for the sharp decline in the BTC exchange rate

Arthur Hayes admits a further decline in the value of the first cryptocurrency

05.09.2024 - 13:00

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The material is not an investment recommendation and is published for informational purposes only.

What’s new? Co-founder and former CEO of the crypto exchange derivatives BitMEX Arthur Hays has described a scenario in which the bitcoin rate will fall by 12% from current levels and reach $50 000, and altcoins will collapse and find themselves “in the drain pit.” At the same time, the entrepreneur is optimistic about the development of the crypto market in the long term, as he expects the US Federal Reserve to soften its monetary policy.

Arthur Hayes blog

What else is known? Hayes emphasized the sensitivity of BTC to changes in dollar liquidity. He noted that immediately after the announcement of the US Nonfarm Payrolls report, bitcoin jumped to $64 000 but then lost 10% of its value.

The entrepreneur attributed this volatility to changes in the Fed’s Reverse Repo Program (RRP) balance sheet. A higher RRP balance sheet effectively removes liquidity from the financial system, keeping money on the liability side of the Fed’s balance sheet and preventing it from being reinvested or borrowed. According to Hayes, “As soon as the RRP started rising to the tune of ~$120 billion, Bitcoin swooned.”

Hayes believes that the RRP balance will continue to grow, which will only intensify bitcoin’s problems. According to him, in the best case, the rate of the first cryptocurrency will hold at current levels, and in the worst case — will fall to $50 000. Other cryptocurrencies, he said, could fall even deeper into the crisis.

Earlier, the head of the leading cryptocurrency market maker DWF Labs predicted an increase in competition between crypto projects due to the upcoming compensation payments to clients of the crypto exchange FTX, which went bankrupt in November 2022. The platform, whose top management is accused of multi-billion dollar fraud, will begin distributing $16 billion to creditors in the fourth quarter of this year.

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