BitMEX Founder Arthur Hayes Forecasts a Robust 20-30% Bitcoin Correction by Early March
Arthur Hayes, the founder of BitMEX, recently outlined his market sentiments and strategy for the coming months in a blog post dated January 5th. In his candid and direct style, Hayes disclosed his crypto portfolio composition and detailed a trading strategy centered around Bitcoin’s anticipated correction.
Hayes revealed a substantial portion of his portfolio is allocated to Bitcoin and Ethereum, constituting roughly 70%. However, he referred to his other holdings as “shitcoins,” emphasizing their lower liquidity and the poor liquidity of derivatives associated with them. This lack of liquidity led Hayes to assert that for a liquid macro hedge, he must rely on Bitcoin derivatives, employing options for a specific trade setup he expects to resolve within a fortnight.
Expressing his prediction, Hayes forecasted a healthy 20% to 30% correction in Bitcoin’s price by early March. He pointed to the potential impact of upcoming US-listed spot Bitcoin ETFs, speculating that their anticipation could drive Bitcoin’s price higher, possibly touching $60,000 or approaching its 2021 peak near $70,000. This surge, if combined with dollar liquidity withdrawal, could trigger a more severe 30% to 40% correction, prompting Hayes to withhold buying Bitcoin until after these pivotal March decision dates.
Detailing his trading plan, Hayes intends to execute a sizable put position in late February, favoring puts expiring on June 28th, rather than March 29th, to mitigate negative theta decay. He plans to select a strike price 20% to 25% out of the money based on the current at-the-money quarterly June futures contract price, seeking substantial leverage on these puts.
Hayes emphasized the criticality of timing the exit, highlighting the path-dependency of option payouts and the risk of losing money despite accurate market predictions if the position isn’t closed in a timely manner. He aims to close his put position between March 12th and 20th, hoping to capitalize on a predicted market correction and secure profits.
Looking beyond this potential correction, Hayes suggested a bullish continuation in the crypto market by the end of March, postulating a resurgence in crypto value amid expectations of Bitcoin’s block reward halving and the resolution of market turbulence caused by regulatory actions.
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