Renowned crypto entrepreneur and former BitMex head Arthur Hayes has stepped into the spotlight with another essay on financial markets, U.S. Federal Reserve monetary policy and, of course, cryptocurrencies. Hayes' new piece is called Bouncy Castle.
Alex DovbnyaThe essay comes at a rather interesting time on the crypto market, with Bitcoin (BTC) up more than 25% since the beginning of the month, after having shown exceptionally apathetic movement and corresponding volatility in previous months. In the new essay, the author identifies three possible scenarios that should help him win whatever way things go.
Arthur Hayes' trade setups
The first scenario is that Bitcoin's current bullish behavior is a natural rebound from the lows and BTC slowly climbs up until U.S. dollar liquidity conditions are sufficient to create powerful momentum. In that case, Hayes' plan would be to wait for confirmation of measures that can improve liquidity conditions, i.e., a pivot of U.S. monetary policy, and enter Bitcoin even if it doubles in time, say to $40,000. The logic is that a pivot would mean a hike to $69,000 and higher.
The other two scenarios derive from the general thesis that the current growth of the cryptocurrency market is the result of frontrunning the start of money printing.
It is assumed that the Fed either does not believe the good macro reports and does not turn around, causing Bitcoin to crash to previous lows. Or the Fed pivots, starts printing money again and launches the bull market at full capacity. There is little difference between these two scenarios, Hayes says, as the market will win either way as they both involve the start of monetary policy easing.
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Alex Dovbnya
Arman Shirinyan
Dan Burgin
Vladislav Sopov