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BitMEX Co-Founder Arthur Hayes Warns of a Mini-Financial Crisis in March

Arthur Hayes, the founder and former CEO of BitMEX, one of the largest cryptocurrency derivatives exchanges in the world, has published a new blog post titled “Yellen or Talkin’” on the BitMEX Crypto Traders Digest. In the post, Hayes shares his insights on the current state of the US financial sector and the implications for the cryptocurrency market.

Hayes begins by contrasting the actions and words of the two most influential figures in the US financial system: Treasury Secretary Janet Yellen and Federal Reserve Chairperson Jerome Powell. He argues that Yellen has been more proactive in injecting liquidity into the global markets by shifting her department’s borrowing to short-term Treasury bills, while Powell has been more passive and vague about the future of monetary policy.

Hayes then points out the potential risks of inflation and market volatility in the coming months, especially due to the impact of weather and geopolitics on shipping costs. He suggests that Powell will try to avoid cutting interest rates or resuming quantitative easing (QE) until absolutely necessary, as these measures could further fuel inflation and erode the value of the US dollar. However, Hayes believes that Bitcoin, the leading cryptocurrency by market capitalization, is already anticipating these scenarios and will benefit from them in the long run.

The most interesting and controversial part of Hayes’ post is his prediction of a mini-financial crisis in March, triggered by the expiration of the Bank Term Funding Program (BTFP). The BTFP is a program that allows banks to borrow money from the Federal Reserve at a low interest rate, which was introduced in March 2020 as a response to the COVID-19 pandemic. Hayes claims that neither Yellen nor Powell has mentioned the possibility of extending the BTFP, which means that the banks will have to repay almost $200 billion by March 12th. This could cause a liquidity crunch and a spike in interest rates, forcing the Fed to intervene and provide more stimulus.

Hayes concludes by stating that he is betting on the non-renewal of the BTFP and the ensuing mini-crisis, which he expects to drive down the prices of the S&P 500 and Nasdaq 100 indices, as well as Bitcoin. He says that he will use this opportunity to buy more crypto and sell more Treasury bills, as he expects Bitcoin to recover faster and stronger than the traditional markets once the Fed starts printing more money.

Hayes’ blog post is a provocative and insightful analysis of the current and future trends in the US financial sector and the cryptocurrency market. It also reflects his bullish and contrarian views on Bitcoin, which he has expressed in previous posts and interviews. Whether his predictions will come true or not remains to be seen, but one thing is certain: Hayes is not afraid to speak his mind and challenge the status quo.

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