Some crypto traders are crediting a Jan. 6 blog post that warned of a bear market with sending prices lower after BitMEX co-founder and former CEO, Arthur Hayes, wrote that “the only way the crypto markets would move up is if the Fed publicly turned on the taps.”
The U.S. Federal Reserve has signaled its intent to tighten monetary policy, turn off money printing, keep tapering and raise interest rates in 2022. That will likely be bad for Bitcoin, crypto stakeholders say. Bitcoin investors generally preach that Bitcoin is a hedge against loose monetary policy, excessive money printing, and inflation, which have occurred during the covid-19 pandemic.
A former equities trader for Citigroup Inc., Hayes launched the BitMEX cryptocurrency exchange in Hong Kong in 2014 with co-founders Ben Delo, and Samuel Reed. By 2018, BitMEX was moving billions every day. BitMEX is one of the earliest crypto derivatives exchanges and is now based in Mahé, Seychelles. Hayes announced in a tweet in December that BitMEX is launching its own token, BMEX — “The Token for True Believers”.
All three BitMEX co-founders are billionaires, according to sources familiar with their finances, Vanity Fair reported in February 2021.
In his blog post, Hayes wrote that crypto investors who believe prices will keep going up are naive. “Let’s forget what non-crypto investors believe,” he wrote. “My read on the sentiment of crypto investors is that they naively believe network and user growth fundamentals of the entire complex will allow crypto assets to continue their upward trajectory unabated.”
Crypto prices have been crashing over the past few days with Ethereum, Binance’s BNB, Solana, Cardano and XRP among the hardest hit, losing $2.1 trillion of value. Bitcoin was worth $47,349 on the morning of Jan. 4 but traded as low as $40,745.70 on Jan. 7.
“The money printer ain’t going BRRR, so #crypto is about to get bludgeoned with a two-by-four studded with rusty nails” Hayes tweeted Jan. 6.
Twitter user @tadleer posted a photo of Hayes, a graph showing the recent trajectory of crypto prices and tweeted,
“looks like the king still got it.”
Hayes isn’t alone in calling the bear market. “SBF, Arthur Hayes, and Zhu Su all tweeted about this being a bear market in the last 48 hours Probably nothing” theweeknd.eth tweeted @LilMoonLambo, in reference to FTX crypto exchange founder and CEO Samuel “SBF” Bankman-Fried and Zhu Su, an investor and the co-founder, CEO and CIO of Three Arrows Capital (3ac).
Zhu Su responded on Twitter, denying that he is bearish.
A bear market typically describes a condition in which securities prices fall 20 percent or more from recent highs amid widespread pessimism and negative investor sentiment, according to Investopedia.
Bitcoin reached an all-time high of $68,990.90 on Nov. 10, 2021 and is down about 40 percent.
Mathematician Nicholas Taleb, author of 2007 bestseller “The Black Swan,” is a one-time admirer-turned-detractor of Bitcoin and has denounced the world’s No. 1 cryptocurrency as a gimmick that resembles a Ponzi scheme. Taleb is credited with coining the phrase “black swan” to mean an unpredictable, rare, and catastrophic event. Bitcoin is not a safe hedge against inflation and it’s too volatile to be an effective currency, Taleb has warned.
On Nov. 26, Taleb suggested in a tweet that those who still view Bitcoin as a hedge against world events should give up on investing and venture into other hobbies like stamp collecting, bird watching or something less risky.
“Arthur sees this as a setup for a major washout,” @0xCadmus tweeted.
Photo: Arthur Hayes, co-founder and former CEO of BitMEX. By Bloomberg / Getty
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?