Key Insights
- Bitcoin’s price hovers around $43,000, facing major events like ETF approval, halving, and FOMC meeting within months.
- Former BitMEX CEO Arthur Hayes expects a significant Bitcoin correction in March due to a potential liquidity crisis and Fed actions.
- Hayes suggests that the expiring BTFP and possible interest rate hikes by the Fed could trigger market volatility in the third month of 2024.
- Bears are opening short positions on Bitcoin, with liquidation points around $46,000.
- Whales might push Bitcoin to $46,000 to exploit the bears, before a potential drop to $38,000, or a breakout towards $50,000
Bitcoin is now standing on one of the biggest ledges of 2022, 2023 and possibly 2024 combined.
At the time of writing, the most popular cryptocurrency trades at around $43,000, and investors are holding their breaths.
The possible ETF approval, the upcoming halving and the next FOMC meeting are all events capable of influencing Bitcoin’s price, and all are set to happen within a few months of each other.
Will Bitcoin continue further up from here, or are we about to see some terrible reds?
Former BitMEX CEO, Arthur Hayes thinks the latter will happen, and March may be a bloody month for BTC.
Incoming 40% Dip On Bitcoin?
Hayes provided a pessimistic outlook for the crypto market in 2024 in a blog post he published on 4 January.
According to Hayes, several variables like the ones mentioned, might lead to a liquidity crisis and a sell-off in the larger financial markets.
When this happens, Hayes says that Bitcoin may crash by as much as 40% in March.
“I could easily see a 30% to 40% correction due to a dollar liquidity rug pull. This is why I cannot buy Bitcoin until these March decision dates have passedâ€
Hayes suggests that the U.S. Federal Reserve’s activities may be the primary cause of the BTC fall.
According to Hayes, the Federal Reserve has been attempting to stabilize the economy by supplying the banking sector with cheap liquidity.
The Federal Reserve even went as far as establishing the Bank Term Funding Program (or BTFP) in 2023, which allows banks to borrow money from the Fed at cheap rates.
But the BTFP is scheduled to expire on March 12 this year. A week after that, the FED will have to decide whether to hike interest rates again, cut it, or leave it be.
Do you see how things might get ugly?
According to Hayes, these two incidents may cause confusion and volatility in the markets, light the fuse for a liquidity crisis, and cause a chain of bank collapses.
What Do The Markets Tell Us?
According to data from Coinglass, the bears are starting to open shorts on BTC, with most liquidation points being in the $46,000 zone.
There is some good and bad news.
The good news is that from Seth’s tweet above, BTC is expected to break through $45,000 very soon, and even hit $46,000.
The bad news is that this move might be a result of market manipulation, where the whales attempt to push prices up, to collect the liquidity of the bears who get kicked out of the market at $46,000.
The next resistance point on the BTC charts is around $46,100 as shown by the red line above.
This means that if the whales follow through and manipulate Bitcoin to $46,000, the rejection that follows might push BTC back down to $43,700.
From here, the cryptocurrency will either break below and target $38,000, or continue further up to $50,000 and await the decline that Hayes predicts for March.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.
