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Bitcoin Co-Founder Predicts 30% Correction Amidst Inflation Fears

Coin WorldTuesday, Jan 28, 2025 8:10 am ET

1min read

Bitcoin co-founder Arthur Hayes has suggested a potential 30% correction in the cryptocurrency's price, citing rising U.S. Treasury yields and inflation concerns as key factors. Hayes predicts a price drop to between $70,000 and $75,000, followed by a potential surge to $250,000 by the end of the year.

Hayes' projection has brought attention to the broader cryptocurrency landscape, with market participants considering the implications of higher Treasury yields on liquidity conditions. Historically, higher Treasury yields have tended to divert investments away from riskier assets like stocks and cryptocurrencies, posing a potential downside risk for Bitcoin's price trajectory.

Rising 10-year Treasury yields have historically indicated a dip in liquidity, which can negatively affect investors' risk appetite. Hayes elaborates, "Inflation is still elevated and likely to go higher in the near future as the world decouples economically. This is why I expect 10-year yields to rise... Stocks will dump." This analysis underscores the close correlation between U.S. equities and Bitcoin, with a Pearson correlation coefficient reaching 0.70, indicating strong co-movement during volatile periods.

Hayes also warns that in the event of liquidity squeezes, Bitcoin may experience a sharper decline compared to stocks, serving as an early indicator of financial distress. He notes that monetary responses from countries like the U.S., China, and Japan through quantitative easing (QE) could dramatically alter market dynamics. Hayes assigns a 60% chance of a potential QE pivot occurring in Q1 or Q2, which, if realized, may act as a significant catalyst for Bitcoin's recovery and growth.

Despite the potential for a price correction, Hayes remains optimistic about Bitcoin's longer-term trajectory. He highlights that the current state of Bitcoin's 'Everything Indicator,' which assesses miner profitability, money supply, and network growth, suggests that the asset is still in a bullish phase—currently reading above 50, indicating a sustained growth potential. Historically, values above 80 have marked cycle tops in earlier years (2017 and 2021), suggesting that there is still considerable room for further price appreciation.

Arthur Hayes' prediction of a 30% correction in Bitcoin highlights significant macroeconomic factors that could shape the cryptoc

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