Key Highlights
- For the first time in over a month, Bitcoin plummeted below the $90,000 threshold after failing to surpass $100K.
- Arthur Hayes has forecasted that Bitcoin (BTC) could soon reach a low of $70,000.
- According to Hayes, the unwinding of large hedge funds’ positions in spot Bitcoin ETFs may drive Bitcoin prices down further.
The cryptocurrency market is currently facing heightened volatility, with Bitcoin
BTC
$87,872
24h volatility:
8.1%
Market cap:
$1.74 T
Vol. 24h:
$63.32 B
experiencing a decline of 6.90% in the last 24 hours, dipping below $89,266.65. This shift below $90,000 for BTC indicates a potential change in market sentiment, coinciding with BitMEX co-founder Arthur Hayes’s statement about an impending “goblin town” for Bitcoin.
In a recent post on X (formerly Twitter), Hayes indicated that Bitcoin could potentially fall to $70,000 if large hedge funds begin unwinding their positions in U.S. spot Bitcoin exchange-traded funds (ETFs). He cited outflows from notable ETFs, such as the BlackRock iShares Bitcoin Trust (IBIT), as a contributing factor to potential price declines.
Hayes elaborated that many holders of IBIT are hedge funds employing long ETF strategies while shorting CME Bitcoin futures. This arbitrage strategy allows them to attain low-risk yields exceeding that of short-term U.S. Treasury returns. However, should the “basis spread” narrow—reflecting a decline in Bitcoin’s price—these funds may liquidate their IBIT shares to buy back CME futures and secure their profits.
Hayes’ Views on Bitcoin Reserves
Since these hedge funds are currently profitable and the basis spread nears Treasury yield levels, a mass unwinding could instigate a significant plunge to $70,000 for Bitcoin. It’s essential to note Hayes’s previous bearish stance regarding the U.S. government’s purchase of Bitcoin (BTC) for its treasury.
Hayes expressed concern that Bitcoin’s volatility could be leveraged by Democrats to criticize the Trump administration, viewing it as a detrimental influence on Bitcoin’s price movements. He remarked that for the U.S. government, “Bitcoin is merely another financial asset.”
Analysts Warn of Market Caution
As Bitcoin descends below the $90,000 mark, noted analyst Ali Martinez urged his followers on X to mirror lions in the wild—waiting for the opportune moment to act. He advised traders to “trade with precision, not emotion,” emphasizing the market’s “volatile, unpredictable nature filled with traps set by market makers to entrap hasty traders.”
Martinez highlighted that a significant factor contributing to the recent decline in cryptocurrency prices is the drastic reduction in liquidity. He noted that since December 2024, capital inflows into crypto have plummeted by over 70%. This reduction stands as a “massive warning sign” that participants in the crypto market seem to have dismissed during recent times.
It’s noteworthy that Bitcoin’s recent downturn isn’t solely attributable to hedge fund maneuvers or liquidity shortages; the market has also been impacted by external occurrences, including an unprecedented hack at Bybit, a prominent cryptocurrency exchange, and a controversial meme coin issue involving Argentina’s President Javier Milei.
Caroline Mauron, co-founder of Orbit Markets, informed Bloomberg that these events have reignited prevailing negative sentiments among crypto stakeholders. The Bybit breach was particularly detrimental, adding to a series of recent incidents that have undermined investor confidence within the sector.
Disclaimer: Coinspeaker is dedicated to delivering unbiased and transparent reporting. This article aims to provide accurate and timely information but should not be considered as financial or investment advice. Given the rapidly changing market conditions, we encourage readers to verify information independently and consult a professional before making any decisions based on this content.
A crypto journalist with over 5 years of experience in the industry, Parth has worked with major media outlets in the crypto and finance sectors, accumulating expertise through various market cycles. He is also the author of four self-published books.
Parth Dubey on LinkedIn
