A prominent cryptocurrency investor has stated that Bitcoin (BTC) and rising altcoins are sound purchases.
Arthur Hayes wrote in a blog post that his previous risk-averse position on cryptocurrency investments had changed and he had become more bullish on some BTC purchases.
JAYPOW is up to speak today. He ain’t ready to stop the bull market. “Be Present” is my essay on why I have started to buy $BTC. Yaaaarrrr!!!!https://t.co/SzwusFRSI5 pic.twitter.com/2iZtuAFU19
— Arthur Hayes (@CryptoHayes) February 7, 2023
He stated that ongoing economic issues at the United States Federal Reserve forced him to avoid risky assets. Federal rate hikes aimed at slowing rampant inflation have triggered rises in cryptocurrency investment activity, he stated.
The BitMEX co-founder said in his post,
“My concerns about this potential outcome, which I handicapped would most likely happen later in 2023, has led me to keep my spare capital in money market funds and short-dated U.S. Treasury bills. As such, the portion of my liquid capital that I intend to eventually use to purchase crypto is missing out on the current monster rally we’re seeing off of the local lows. Bitcoin has rallied close to 50% from the $16,000 lows we saw around the FTX fallout.”
He also predicted that Bitcoin would see additional rises in valuation after 40 percent climb in January.
Liquidity Returns, Debt Ceiling Looms
Despite this, Federal Reserve measures come amid quantitative tightening to remove liquidity from US markets and diminished risk assets. However, the first fiscal half of 2023 will see liquidity return to markets to avoid triggering a debt ceiling crisis, which lawmakers will vote on in the summer, he explained
Treasury General Account (TGA) will eliminate roughly $500 billion USD in cash, which will effectively counteract the Fed’s $100 billion monthly liquidity removals.
He continued: “The TGA will be exhausted sometime in the middle of the year. Immediately following its exhaustion, there will be a political circus in the U.S. around raising the debt limit. Given that the Western-led fiat financial system would collapse overnight if the US government decided to forgo raising the debt ceiling and instead defaulted on the assets that underpin said system, it’s safe to assume the debt ceiling will be raised.”
Time to (Macro) Unwind
Hayes added that he would mostly invest in USD and Bitcoin but would require sufficient timing.
He added: “I’ll deploy over the coming days. I wish my size actually mattered, but it doesn’t — so please don’t think that when this happens, it will have any discernible effect on the price of the orange coin.”
Additionally, altcoins offered opportunities, relying on optimal timing to receive the highest returns.
He concluded: “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 […] “At the same time, the shitcoin complex stages an aggressive rally. Then shitcoins rediscover gravity, and interest shifts back to Bitcoin and Ether. And this stair-stepping process continues until the secular bull market ends.”
The news comes amid a tumultuous February as Bitcoin surged after the US revealed strong jobs data and modest growth for 2022.
The digital coin skyrocketed past $23,000, indicating the first massive rally since 2020. It also retained its value of around $23,000 amid several interest rate hikes at 25 base-points interest each.
