Bitcoin likely bottomed when it dropped near $80,000 last week, according to former BitMEX CEO Arthur Hayes, who predicts improving liquidity conditions will support cryptocurrency prices. The largest digital asset fell over 35% from all-time highs before finding support at $80,500.
U.S. Liquidity Trends Point to Recovery
Hayes told X followers that U.S. liquidity trends point toward recovery for Bitcoin and risk assets. The Federal Reserve plans to end its quantitative tightening phase next month, stopping balance sheet contraction and releasing more liquidity into markets.
The ex-BitMEX executive noted minor improvements in dollar liquidity as the Fed's balance sheet should stop shrinking this week. Bank lending increased in November, adding to signs that financial conditions may ease for cryptocurrency markets.
Hayes' Bitcoin Price Prediction
Hayes predicted that Bitcoin will trade below $90,000 with possible retests of the low $80,000 range, but he expects the $80,000 support to hold. The assessment reflects confidence that the worst selling pressure has passed for Bitcoin.
Rising liquidity typically lifts Bitcoin and altcoins as more capital flows into risk assets. Hayes emphasized throughout the recent drawdown that quantitative easing must return before sustained price pressure can lift for cryptocurrencies.
Market Expectations and Fed Policy
He stated last week that stocks needed to decline significantly before recovery sets in for digital assets. Hayes concluded that markets are positioned for increased money printing, which requires AI technology stocks to drop first.
Market expectations for Federal Reserve policy changes have fluctuated considerably amid the U.S. government shutdown and limited macroeconomic data. CME Group's FedWatch Tool shows 79% odds of a 0.25% rate cut at December's meeting, up from 42% one week earlier.
Economist Mohamed El-Erian described the volatility in rate expectations as stunning, noting it contradicts the predictability and stability the Fed typically maintains. He attributed wild swings to shutdown-disrupted data, dual-mandate pressures, and a lack of clear strategic framework.
Hayes' Enduring Bullish Stance
Hayes remained bullish on Bitcoin throughout the decline from October records, reiterating that the return of quantitative easing remains necessary for sustained cryptocurrency price gains.