Bitcoin Billionaire Arthur Hayes Is Bearish on the Halving—Here's Why

Bitcoin billionaire Arthur Hayes expects risky assets, like crypto, will have a tough time until May. That means the market could be in for prices slumping, rather than soaring, around the BTC halving.

“The narrative of the halving being positive for crypto prices is well entrenched. When most market participants agree on a certain outcome, the opposite usually occurs,” the BitMEX co-founder and former CEO wrote in his latest essay. “That is why I believe Bitcoin and crypto prices in general will slump around the halving.”

The Bitcoin halving is a regularly scheduled event that cuts the rate at which new BTC flows into the market through miner rewards. This next halving—which will cut the miner reward from 6.25 to 3.125 BTC—will be the fourth ever to occur since Bitcoin was first launched in 2009.

It’s normally the case that this periodic reminder of Bitcoin’s scarcity causes the price of BTC—and the rest of the crypto market—to rally. But this time around, Hayes explains that U.S. dollar liquidity could delay the post-halving pump that most traders expect.

He goes on to explain that dollar liquidity has been impacted by U.S. tax payments, the Federal Reserve’s ongoing Quantitative Tightening (QT) program, and the Treasury General Account’s (TGA) balance. Together these macroeconomic forces have tightened U.S. dollar liquidity in the market, impacting asset prices and trading strategies.

So instead of setting off a rally, Hayes expects this next Bitcoin halving could instead “add propellant to a raging firesale of crypto assets.”

For that reason, he’s staying out of the market until things die down in May. He explained he’s sold some Solana (SOL), meme coin cat in a dogs world (MEW), and NetMind Chain utility coin NetMind Token (NMT).

“The proceeds were placed into Ethena’s USDe and staked to earn that phat yield,” he writes. “Before Ethena, I would have held USDT or USDC and earned nothing while Tether and Circle captured the entire T-bill yield.”

Ethena’s USDe is a “synthetic dollar protocol” that generates yield from a combination of Ethereum staking rewards and hedging derivatives positions. But the high yields have drawn comparisons to Terra’s TerraUSD stablecoin, which famously wiped out $11 billion when it crashed in 2022.

At the time of writing, the USDe yield is sitting at 37.1%, according to the Ethena homepage. But there’s one thing Hayes said he won’t do during the fallow period: Short the market.

“From now until May 1st, I will be in a no-trade zone,” he wrote. “I hope to return in May with dry powder ready to deploy to position myself for the bull market to begin in earnest.”

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