Here’s why Arthur Hayes anticipates a 30% BTC price correction in the near term.
Edited By: Saman Waris
- Arthur Hayes projected a 30% BTC correction to $70K-$75K in the near term.
- He linked the potential drop to rising U.S. Treasury yields and sticky inflation.
Arthur Hayes, co-founder of the BitMEX exchange, has cautioned that Bitcoin’s [BTC] price could drop to $70K-$75K in the short term before rising to $250K by the end of the year. Part of his recent blog read,
“I think we are more likely to go down to $70,000 to $75,000 Bitcoin and then rise to $250k by the end of the year than to continue girding higher with no material pullback.”
Hayes linked his near-term ‘30% BTC correction forecast’ to rising 10-year Treasury yields and its likely impact on stocks and crypto.
Is BTC due for extended correction?
For context, a hike in Treasury yield always signals tighter liquidity, making risk-on assets like stocks and crypto less attractive than bonds. So, a rising yield is a net negative to the crypto market, especially BTC.
Hayes added,
“Inflation is still elevated and likely to go higher in the near future as the world decouples economically. This is why I expect 10-year yields to rise… Stocks will dump.”
Given the close correlation between U.S. stocks and BTC (surged to a recent high of 0.70, per Pearson 30-day correlation), such a decline could drag the king coin, too.
Hayes noted BTC could drop before U.S. stocks in such a near-term liquidity squeeze scenario.
“BTC is extremely sensitive to global fiat liquidity conditions; therefore, if a fiat liquidity crunch is forthcoming, its price will break down before that of stocks and will be the leading indicator of financial stress.”
However, the investor highlighted that such distress would force the U.S., China, and Japan to respond by printing money and QE (quantitative easing). He forecasted a 60% chance of a likely QE pivot in Q1 or Q2.
“A mini financial crisis in the US would provide the monetary mana crypto craves. It would also be politically expedient for Trump.”
Since QE drives U.S. liquidity and risk-on assets, it could fuel the BTC rally to a new all-time high of $250K, per Hayes.
That being said, BTC’s ‘Everything Indicator,’ a collective gauge of miner profitability, money supply, and network growth, showed BTC was halfway in the bull run.
Historically, a reading above 80 (red zone) marked previous cycle tops in 2017 and 2021. The current reading was above 50, suggesting room for growth.
