Former BitMEX CEO Arthur Hayes has opined that Bitcoin might be close to bottoming out following a truly violent sell-off that took place earlier this week.
That said, Hayes has cautioned traders not to buy the dip prematurely, claiming that they have to wait for a steeper sell-off in the stock market.
A "weathervane" for liquidity
In a Nov. 17 blog post, Hayes explicitly attributed the cryptocurrency market plunge to reduced US dollar liquidity, which is the amount of money circulating in the system.
According to him, Bitcoin’s price primarily reflects expectations about future USD liquidity.
Earlier this year, the cryptocurrency managed to rally to all-time highs due to a combination of strong ETF inflows, liquidity-positive rhetoric, as well as treasury companies buying a lot of coins.
Now, however, liquidity is contracting once again, and Strategy's premium has collapsed. Hence, Michael Saylor's company is no longer capable of raising capital efficiently.
Will the Fed change course?
Bitcoin's plunge has coincided with the fading odds of the Fed implementing another rate cut this year.
However, Hayes is convinced that a significant stock market correction could potentially restart QE-like liquidity injections.
Once money printing resumes, Bitcoin could potentially surge all the way to $200,000.
Fundstrat's Tom Lee recently predicted that the BTC price could reach the aforementioned as early as January 2026 despite the severity of the ongoing sell-off.
Earlier today, Bitcoin briefly plunged below $81,000 on the Bitstamp exchange before paring some losses.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team