BitMEX Co-Founder: Bitcoin's Price Drop Signals Impending Liquidity Crisis

BitMEX co-founder Arthur Hayes recently shared his views on the cryptocurrency market, particularly Bitcoin, in a series of posts. Hayes, a prominent figure in the crypto space, believes that Bitcoin serves as a real-time indicator of global fiat liquidity. He pointed out that Bitcoin's price reached a high of $110,000 before the U.S. midterm elections and subsequently dropped to around $78,000, a decline of approximately 30%.

Hayes argues that this significant price drop signals an impending liquidity crisis, despite the U.S. stock market indices remaining near all-time highs. He expresses confidence in Bitcoin's signal, suggesting that the U.S. stock market is on the brink of a severe pullback due to recession concerns. Hayes predicts that if Bitcoin leads the market downwards, it will also play a similar role in the recovery, with the Fed likely to intervene if his prediction holds true.

Hayes remains bullish on the cryptocurrency market, believing that we are still in a bull market cycle. He suggests that the worst-case scenario for Bitcoin would be a return to the previous cycle's all-time high of $70,000. However, he is uncertain whether Bitcoin will actually fall to that level. Hayes notes that a positive U.S. dollar liquidity indicator is the decreasing balance of the U.S. Treasury General Account, which is equivalent to liquidity injection. Given his confidence in Trump as a financier and his ultimate goals, Hayes increased risk in Bitcoin trading in the range of $80,000 to $90,000.

Hayes acknowledges the possibility of a "dead cat bounce" and expects another opportunity at the $80,000 low if the S&P 500 or Nasdaq 100 retraces 20% to 30% from their all-time highs. He also warns of a potential synchronized global market downturn if a major financial institution faces bankruptcy risk, which could cause all risk assets, including Bitcoin, to suffer together. In such a scenario, Bitcoin may once again drop below $80,000, potentially even falling to $70,000. Regardless of the market conditions, Hayes advises investors to cautiously buy the dip during the decline, without using leverage, and wait for the final financial earthquake in the global market, which he