Former Bitmex CEO Forecasts Potential 30% BTC Correction Amid Spot Bitcoin ETF Approval

Arthur Hayes, former Bitmex CEO, recently outlined his predictions regarding Bitcoin's price in a Medium post. Alongside this forecast, he expressed concerns about the potential impact of spot Bitcoin exchange-traded funds (ETFs) on Bitcoin's price. Reports suggest the U.S. Securities and Exchange Commission (SEC) is poised to approve multiple spot Bitcoin ETFs in the coming week.

Hayes' Projections:

Hayes anticipates a convergence of three critical variables in March, foreseeing a notable correction in Bitcoin's value:

Price Correction Prediction:

By early March, Hayes expects Bitcoin to undergo a healthy 20% to 30% correction from its prevailing level. He cautions that this correction could intensify further if U.S.-listed spot Bitcoin ETFs commence trading.

Factors Contributing to the Correction:

Firstly, he focuses on the Fed's Reverse Repurchase Operations (RRPs), predicting a potential $200 billion RRP balance by early March. He highlights a necessity for an additional source of dollar liquidity to sustain market momentum. Additionally, he notes banks needing cash to swap with U.S. Treasuries and eligible bonds repo’d with the Fed by March 12. Lastly, Hayes speculates on the possibility of the Fed initiating its first rate cut since 2021 during the Federal Open Market Committee (FOMC) meeting on March 20.

Concerns about Spot Bitcoin ETFs:

Hayes elaborates on the impact of spot Bitcoin ETF anticipation, envisioning a scenario where heightened expectations of fiat inflow into these ETFs push Bitcoin's price toward $60,000 or even closer to its 2021 peak of $70,000. In such a scenario, he warns of a potential 30% to 40% correction, attributing it to a potential liquidity shock.

Hayes' assessment signals a cautionary stance toward Bitcoin's near-term prospects, hinting at potential volatility and a significant correction on the horizon, particularly around mid-March.