arthur hayes

Speculators have had their interests piqued as of late thanks to the rise in volatility in the crypto markets, and many are wondering whether the bullish price action is to continue or whether or not the recent rise in prices is just a bull trap. Arthur Hayes has written a new blog post in which he details some of the reasons that the price could fall once more, catching many unaware.

The Bitcoin price has rallied significantly since the lows

Over the course of the last few weeks, the Bitcoin price has rallied significantly, even managing to briefly break out above the $23k threshold.

Many of those calling for significantly lower prices have now been left on the sidelines, and those who were shorting below $20k have incurred significant losses – much of the price appreciation has been the consequence of a series of cascading liquidations.

Arthur Hayes believes that the price could now fall once more

Although he notes that the falling inflation means that the Federal Reserve may be more likely to make a pivot, Hayes concedes that many markets participants have already been pricing this in.

The fact that Jerome Powell has stated that he is determined to keep rates high to see off the inflation, and that he will keep rates high for several years if that is what is necessary, means that the market may be getting overly excited at this stage.

If Chairman Powell continues to raise rates, then a highly likely scenario would be that the markets would have to recoil, and the Bitcoin price could continue on its descent, and fall back to levels that haven’t been seen for several months.

Arthur Hayes also notes that the DCG uncertainty is yet to fully unfold, and it remains to be seen exactly how much damage this will cause to the markets moving forward, or whether or not Barry Silbert will be able to keep the company afloat.

Market fundamentals still seem bearish

Many of the fundamentals of the market do still seem bearish, and there are many reasons as to why one may think that the current rally isn’t something that investors ought to be particularly excited about.

There is still a high possibility that Powell does decide to raise interest rates further at the next Fed meeting, in which case the fact that the market has been pricing in the opposite could lead to a significant decline in the Bitcoin price back to levels seen a few months ago – it could even mean that the price of Bitcoin hasn’t yet bottomed out.

Could the end of the bear market be in sight?

Whether or not the end of the bear market is now in sight depends on a variety of a different factors, both within the crypto industry and amidst the macroeconomic conditions more generally.

Generally, bear markets in Bitcoin have historically lasted about one year. The bear market that we are currently in has now lasted longer than this, and there are some people who believe that this time is different.

Nevertheless, it is also possible that the worst of the market is now over, and speculators will begin to think more seriously about the upcoming implications of the next Bitcoin halvening.

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