Arthur Hayes bets on Bitcoin, altcoin surge in H1 2023 as he buys BTC

Bitcoin (BTC), Ethereum (ETH), and even emerging altcoins are safe “buys,” says the previously risk-averse investor.

IN blog In a post published on Feb. 8, industry stalwart Arthur Hayes announced a reversal of his current cryptocurrency investment plans.

Hayes changes approach to “risk assets”

The current macroeconomic conditions emanating from the US Federal Reserve have previously led Arthur Hayes to avoid what he calls “risk assets”.

As inflation slows in tandem with the Fed’s rate hike, several new storms are brewing in the US, he said, and the Fed, Congress and Treasury will run the economy as they see fit.

The problem is to guess how these events will unfold over the course of the year. For Hayes, 2023 could well be split into two halves, with H1 being the ideal investment environment for crypto.

This contradicts a previous thesis from mid-January, in which the former BitMEX CEO said he was staying on the sidelines due to fears that the Fed-driven capitulation event would hit risky assets.

“My concerns about this potential outcome, which is likely to happen later in 2023, led me to keep my free capital in money market funds and short-term US Treasury bills,” he explained.

“Thus, the part of my liquidity that I intend to eventually use to buy cryptocurrency is overlooking the current monstrous rally that we are seeing against the backdrop of local lows. Bitcoin is up almost 50% from the $16,000 low we saw during the FTX crash.”

Hayes continued that Bitcoin is likely far from recovering despite a 40% gain in January alone, comparing the risky asset environment to 2009 and the start of QE.

Annotated S&P 500 (SPX) chart (screenshot). Source: Arthur Hayes/ Medium

This year, the picture is complex – quantitative easing has been replaced by quantitative tightening, when liquidity is withdrawn from the US financial system at the expense of risky assets.

However, H1 appears to be providing some relief as some liquidity returns to avoid hitting the debt ceiling too soon. This may continue until Congress votes to raise the debt ceiling in the summer, which Hayes and others say is inevitable.

Cash in the Treasury General Account (TGA) will be emptied to $500 billion, nullifying the $100 billion monthly liquidity that the Fed is removing.

“TGA will be exhausted somewhere in the middle of the year. Immediately after its exhaustion, a political circus around raising the debt limit will begin in the United States, ”the blog predicts.

“Given that the Western-run fiat financial system will collapse overnight if the US government decides not to raise the debt ceiling and instead defaults on the assets underlying the system, it’s safe to assume that the debt ceiling will be raised.”

US federal debt trend chart (screenshot). Source: US Department of the Treasury.

We are looking for “untwisting” the macro

It is then that the situation will change, and risky assets can again become a thorn in the side of every investor.

The BTC price figure that signaled Bitcoin’s biggest spikes soared to $23K

It’s all a matter of time, says Hayes. His plan is to move to US dollar cash, from where a move to select risky assets is possible. It looks like Bitcoin is at the top of the menu.

“I will deploy in the coming days. I wish my size really mattered, but it doesn’t – so please don’t think that when this happens it will have a noticeable impact on the price of the orange coin,” he told readers.

However, in the future, altcoins represent a big opportunity, as explained in the blog’s conclusion, and they are also time dependent.

“The key to shitcoins is understanding that they rise and fall in waves. First, crypto-reserve assets, i.e. Bitcoin and Ethereum, are growing. The rally of these steadfasts eventually stalls and then prices drop a bit,” Hayes wrote about crypto market cycles.

“At the same time, the shitcoin complex is showing an aggressive rally. Then the shitcoins rediscover gravity, and interest returns to bitcoin and ether. And this stepwise process continues until the age-old bull market ends.”

Since the beginning of the year, the total market capitalization of cryptocurrencies has grown by approximately 34%, according to data from Cryptooshala Markets Pro and trade view shows.

Candlestick chart of the total market capitalization of a cryptocurrency for 1 day. Source: Trading View

Thus, in 2023, the process will be driven by the “unrolling” of the short window of more favorable economic conditions that is currently manifesting in the US.

The views, thoughts and opinions expressed here are those of the authors only and do not necessarily reflect or represent the views and opinions of Cryptooshala.

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