Main Insights
- Arthur Hayes anticipates Bitcoin hitting a new all-time high as the Federal Reserve shifts away from Quantitative Tightening.
- The upcoming transition towards Quantitative Easing by the Fed in May may further enhance market liquidity.
- Following Fed Chair Jerome Powell’s address, Bitcoin surged by 4%, indicating a positive market sentiment.
Having successfully predicted Bitcoin’s (BTC) drop below $80,000, Arthur Hayes is now embracing a bullish outlook.
The former CEO of BitMEX believes that Bitcoin has reached its lowest point around $77,000 and is poised to hit a new peak before facing another downward adjustment.
Bitcoin Set to Achieve New All-Time High
In a post on X on March 24, Hayes forecasted that Bitcoin could soar to $110,000 before dipping back to the $76,500 mark, which has been the recent low for several months.
His positive outlook is based on forthcoming macroeconomic changes.
Hayes noted that the Federal Reserve is moving from Quantitative Tightening (QT) to Quantitative Easing (QE) for treasuries, a strategy that typically brings liquidity into financial markets.
Moreover, he downplayed worries regarding tariffs, arguing that they would have minimal short-term impact.
QT involves a reduction of the Fed’s balance sheet by selling assets or allowing bonds to mature, serving as a contractionary approach intended to manage inflation.
Contrarily, QE expands the money supply, providing capital to the economy and encouraging investment.
Hayes contends that the Fed’s transition to a more accommodating monetary policy could be the bullish impetus Bitcoin has been missing recently.
Fed’s Policy Change May Boost Liquidity in Crypto Markets
Jerome Powell, the Fed Chair, has announced that QT will decrease from $25 billion monthly to $5 billion per month starting in April.
Market analysts at Polymarket are now factoring in a complete certainty that QT will conclude prior to May, augmenting expectations for QE to follow.
If this shift occurs, the influx of capital could drive Bitcoin and the overall cryptocurrency market upwards, igniting the next phase of the bull market.
Some experts predict that the possibility of an interest rate reduction could be introduced at the next Federal Open Market Committee (FOMC) meeting, further bolstering the case for enhanced liquidity.
Historically, QE has led to increased disposable income for consumers.
During the COVID-19 pandemic, aggressive measures taken by the Fed resulted in an extraordinary rise in crypto valuations as surplus liquidity flowed into riskier assets. A similar scenario might unfold if QE is reinstated.
Bitcoin reacted positively to Powell’s recent remarks, rising by 4.5% within 24 hours. The broader cryptocurrency market experienced similar gains, with altcoins rebounding after a stagnation period.
With the Fed’s policy under scrutiny, all attention is now directed towards Bitcoin’s next steps as it nears significant resistance levels.
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