Hayes: Alternative Season Will Not Resume Until Bitcoin Reaches $70K and Ethereum $4K

Former BitMEX CEO Arthur Hayes asserts that altcoins are unlikely to experience a revival until Bitcoin exceeds $70,000 and Ethereum surpasses the $4,000 threshold.

In a recent blog entry, the crypto billionaire noted that both Bitcoin and Ethereum have demonstrated resilience in the face of recent market downturns, primarily due to structural support from inflows into U.S.-listed exchange-traded funds (ETFs).

“During this cycle, Bitcoin and now Ether have structural bids in the form of net inflows into US-listed exchange-traded funds (ETF),” he stated.

Hayes Anticipates Solana to Reach $250

Hayes also suggested that Solana could resume its upward trajectory and exceed $250.

However, he contended that the overall market impact of a Solana surge is considerably less substantial compared to the wealth effect produced by Bitcoin and Ethereum, owing to their larger market capitalizations.

Hayes proposes that a liquidity-driven rally in Bitcoin and Ethereum towards the year’s end will pave the way for the emergence of an “alt season” or a widespread increase in altcoin valuations.

Bad Gurl Yellen is full of $ liq and she is a squirter. “Water, Water, Every Where” is an essay on how she will soak the markets with $300bn to $1.05tn btw now and year end.https://t.co/U04IAYgwDQ pic.twitter.com/hgFISCkwXN

— Arthur Hayes (@CryptoHayes) August 13, 2024

Regarding his trading approach, Hayes aims to take advantage of the current market dynamics.

He believes that as U.S. Treasury bills (T-bills) are issued and the Treasury’s buyback initiative continues, liquidity in the financial markets will enhance, potentially leading to a more robust crypto market beginning in September.

With the U.S. presidential election scheduled for November, Hayes foresees increased market manipulation by Treasury Secretary Janet Yellen in October, with the goal of uplifting the stock market.

Hayes plans to realize profits from his more speculative trades during this timeframe, especially in October, and reallocate his capital into more stable assets such as staked Ethena USD (sUSDe).

He anticipates that the U.S. debt ceiling will be raised early next year, which he believes will trigger a significant influx of liquidity from the Treasury and potentially the Federal Reserve, setting the groundwork for a substantial bull market in cryptocurrencies.

Hayes Maintains Optimism on Digital Assets

In the blog post, Hayes also explored the connection between the U.S. Treasury Department and the Federal Reserve, highlighting the importance of fiscal dominance, where the need to finance the government takes precedence over the central bank’s concerns regarding inflation.

As the debt-to-GDP ratio exceeds 100%, the Treasury, which oversees debt issuance, gains increased authority, ultimately directing the Federal Reserve to support government expenditure by expanding the money supply.

He remarked that this transition was expedited by the COVID-19 pandemic, which elevated debt levels.

Hayes pointed out that attention is focused on how Treasury Secretary Janet Yellen may manage liquidity to foster economic growth and reduce the debt-to-GDP ratio.

This involves utilizing programs like the Reverse Repo Program (RRP) and issuing Treasury bills (T-bills) to inject liquidity into the financial markets.

The crypto billionaire indicated that Yellen’s initiatives, aimed at enhancing nominal GDP growth, will likely favor risk assets, including cryptocurrencies like Bitcoin.

“We know that $301bn of T-bills will be net issued between now and year-end,” he wrote.

“If this relationship holds true, Bitcoin will quickly retrace the dump caused by the yen strengthening. The next stop for Bitcoin is $100,000.”

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