he price of Bitcoin has seen its fair share of fluctuations in recent times, but Arthur Hayes, the co-founder of BitMEX, a prominent cryptocurrency exchange, is making a bold prediction. He suggests that Bitcoin could potentially surge to $70,000, and according to him, the only thing holding it back is the market's fixation on the Federal Reserve's nominal rate.
The Impact of Fed Actions
Hayes presents his case in a blog post called Crypto Trader Digest, where he delves into the Federal Reserve's actions aimed at controlling inflation. He highlights that since March 2022, the Fed has raised interest rates multiple times, prompting experts like Hayes to reevaluate their Bitcoin forecasts.
Challenging Conventional Beliefs
In his blog post, Hayes challenges the conventional belief that Bitcoin's value is negatively correlated with rising interest rates. He brings forward various metrics, such as US treasury yield and GDP growth, to support his argument. According to Hayes, these factors have pushed the actual yield on 5% government bonds closer to 4%, making assets like Bitcoin and stocks more appealing.
The Fed's Rate Path
Hayes predicts that the Federal Reserve will likely continue raising rates, prompting investors to seek positive real yields, ultimately driving a bullish trend for Bitcoin. This upward movement began in March 2023, but despite the 29% increase in Bitcoin's value since then, many are still fixated on nominal Fed rates rather than the real rate.
Realizing the Potential
Hayes emphasizes that the reason Bitcoin hasn't reached the $70,000 mark is that most people are focused on nominal Fed rates, overlooking the U.S.'s remarkable nominal GDP growth.
Past Predictions and Market Dynamics
This isn't the first time Arthur Hayes has made optimistic predictions about Bitcoin. In March 2020, he forecasted Bitcoin's rise from $8,000 to $20,000, and by the end of that year, Bitcoin's price had surpassed even his expectations, closing at around $27,000.
A Potential Catchup by the Market
Hayes has expressed skepticism about Spot Bitcoin ETFs from investment companies like BlackRock, labeling them "crypto gatekeepers" focused on balancing their deposit base. However, he believes that the market's realization of Bitcoin's potential could fuel a significant surge, potentially exceeding 150% by early 2024.
Current Bitcoin Status
At the time of writing, Bitcoin is trading at $26,320, showing a 2.27% increase over the past seven days. As Bitcoin continues to be influenced by market dynamics and external factors, Hayes' bullish outlook adds an interesting perspective to the cryptocurrency landscape.