The co-founder of BitMEX mentions that Bitcoin has experienced a significant increase in value ever since the Federal Reserve introduced a 25 billion dollar program aimed at stabilizing the U.S. banking system.
Bitcoin has experienced a significant upward trend in the last six months without a substantial market response. However, according to Arthur Hayes, co-founder and former CEO of BitMEX, it is anticipated that this response will manifest within the next six to 12 months.
During Korea Blockchain Week, the keynote speech on September 5 presented an argument by Hayes. According to his viewpoint, Bitcoin’s bull run originated on March 10, coinciding with the day of Silicon Valley Bank (SVB) being taken over by the Federal Deposit Insurance Corporation.
Two days before SVB’s takeover on March 8, Silvergate Bank entered into liquidation. Subsequently, on March 12, Signature Bank faced compulsory closure enforced by New York regulators.
In response to prevent any further potential collapses, the Federal Reserve established the Bank Term Funding Program (BTFP). Under this initiative, eligible banks were provided with loans of up to a year in exchange for pledging “qualifying assets” as collateral.
Hayes explained that the Federal Reserve effectively supported the entire banking system by offering to acquire problematic bonds in exchange for fresh dollars. This measure aimed to stabilize and safeguard financial institutions during challenging times.
The market, myself included, acknowledged their responsibility for the structural issues in the banking system. One potential solution arose from this recognition: printing more money.
Bitcoin’s Price Surges as Traders Embrace Fixed-Supply Assets
Ever since that day, Bitcoin’s price has been on the rise, currently hovering around 26%. This significant increase is why he asserts that the bull market officially commenced at that point.
They have abandoned the pretense that we are concerned with the dollar’s value and other fiat money.
This prompted traders to consider fixed-supply assets like Bitcoin, as stated by Hayes. However, the rest of the market has yet to respond. He provided a timeline of six to 12 months for that response to occur.
Hayes stated that even if the Federal Reserve and other central banks proceeded with interest rate hikes to facilitate economic tightening, Bitcoin would still exhibit strong performance. Alternatively, Bitcoin’s performance would remain robust if these central banks opted for increased money supply.
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Hayes’s outlook on Bitcoin’s performance remained positive regardless of central banks’ monetary policy choices. He mentioned that in both scenarios, whether the Fed raises or cuts rates. The cryptocurrency industry stands in a favorable position.