Bitcoin's Price Dance: Trump's Budget, Hedge Funds, and the $70K Test

Bitcoin's (BTC) short-term price trajectory, according to crypto veteran Arthur Hayes, is heavily influenced by US politics. The former BitMEX CEO recently shared his insights on the social media platform X, advising investors to "chill out, retrace and wait" in the current market conditions.

Hayes believes that if US President Trump fails to pass his budget, which includes increased spending and a higher debt ceiling, Bitcoin could experience a capitulation event, driving prices down to pre-election levels. He suggests that Bitcoin could potentially retrace to the $75,000 to $70,000 range, testing the strength of Trump's hold on the Republican party.

Hayes also highlights the potential impact of hedge funds that purchased BlackRock's iShares (IBIT) spot Bitcoin exchange-traded fund (ETF) on the market. If Bitcoin's price continues to drop, these funds may sell their IBIT holdings and buy back CME futures, unwinding their positions during US trading hours. This could contribute to further downward pressure on Bitcoin's price, potentially pushing it towards the $70,000 level.

At the time of writing, Bitcoin is trading at $84,498, having declined by more than 4% in the past 24 hours. As the market awaits further developments in US politics and Bitcoin's price action, investors are advised to stay informed and cautious.