Arthur Hayes, the former CEO of BitMEX, who once considered Bitcoin and other cryptocurrencies as “risky assets,” is now rethinking his stance as the U.S. economy faces new challenges and the Federal Reserve’s monetary policy evolves, according to a Medium blog post on February 8th.
Hayes stated that the current macroeconomic conditions, influenced by the actions of the U.S. Federal Reserve, have prompted him to reconsider his investment plans.
As inflation slows and the Fed raises interest rates, new economic challenges are emerging in the U.S., making it difficult to predict the outcomes of these events throughout 2023.
However, Hayes believes that the first half of 2023 could provide a favorable investment environment for cryptocurrencies, including Bitcoin.
Despite previously expressing concerns about a Fed-induced market collapse, Hayes now predicts that Bitcoin is likely to continue its rebound, comparing the current market conditions to those at the start of quantitative easing in 2009.
He also highlights in his blog post the potential for altcoins as a significant investment opportunity conditioned by the timing of market cycles.
Hayes’ Strategy: Risk Assets With Bitcoin At The Top
Hayes plans to move into U.S. dollars and then into select risk assets, with Bitcoin at the top of his list. He believes that the key to successful investment in cryptocurrencies lies in understanding the market cycles, where Bitcoin and Ether lead the way, followed by the rise of altcoins and then a shift back to the stalwarts.
According to Hayes:
Part of my portfolio missed the early innings of this recent rally of Bitcoin — which was also driven by expectations of forthcoming monetary easing — but that doesn’t mean I should be obstinate and refuse to participate in the next part of the rally.
However, the picture is not all rosy, as Hayes also warns that the macroeconomic environment could change as the U.S. Treasury General Account is depleted.
Additionally, a political circus ensues around the raising of the debt ceiling. He believes that the tide will turn, and risk assets could once again become a challenge for investors.
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However, Hayes’ change of tune on crypto investment highlights the complexity of the current economic climate and the importance of timing in successful investments.
As he stated in his blog post:
The key to shitcoining is understanding they go up and down in waves. First, the crypto reserve assets rally — that is, Bitcoin and Ether. The rally in these stalwarts eventually stalls, and then prices fall slightly.