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Arthur Hayes says that the recent drop in the price of Bitcoin has nothing to do with the weakness of cryptocurrencies in particular, but it has more to do with the sharp drop in the value of the dollar that is sweeping the world markets.
Key points:
- Arthur Hayes links Bitcoin’s decline to a $300 billion drop in US dollar liquidity rather than actual crypto assets.
- The USDLIQ is down nearly 7% in six months, reflecting the financial crisis.
- Hayes says the high level of government funding and low liquidity make Bitcoin a risky asset.
in Posted on page X The former head of BitMEX saw a decrease in US dollar volumes of about $300 billion in the past few weeks, mainly due to an increase of $200 billion in the Treasury General Account (TGA).
Hayes also suggested that the US government could rebuild its reserves to spend if they ran out, effectively removing money from the economy.
The dollar liquidity index fell by 7%, which affected Bitcoin.
The decline is reflected in the USDLIQ index, which tracks the value of the dollar.
The index has fallen about 7% in the past six months, falling from a high of around 11.8 million in August to around 10.88 million at the end of January, according to market data shown in Hayes’ post.
Hayes said that the weakness in the price of Bitcoin during the same period should not be surprising.
“The decline in the price of Bitcoin is not surprising because of the decline in the value of the dollar,” Hayes wrote, linking the movement of major economic forces rather than a change in opinion within the cryptocurrency market itself.
Liquid conditions have been a major driver of Bitcoin and other risky assets, with periods of dollar growth often coinciding with strong rallies.
In contrast, when money flows into government accounts or when there is a financial crisis, the speculative situation suffers as energy declines and the appetite fades.
Hayes’ comments come as bitcoin has failed to rebound after recent declines, as investors look for resources such as lower interest rates or get out of ETFs.
Instead, the focus is on macroeconomic reforms, including the management of Treasury funds and the availability of the dollar, as a long-term obstacle.
Bitcoin price drops as Federal Reserve warns and geopolitics affects appetite
The price of Bitcoin fell below $89,000 after a short-term retracement, affected by the economic crisis and the rise of international conflicts that have affected the risk economy.
According to analyst Samer Hassan of XS.com, the Fed remains neutral on policy, including tensions in the Middle East, this… Reduce the need for speculative investment In cryptocurrency markets.
Market data shows a decline in business confidence. CoinGlass statistics show a 42% drop in open trading volume for cryptocurrency futures from recorded levels, with a modest attempt to offset a sharp sell-off.
Meanwhile, capital has shifted to traditional assets such as gold and silver, leaving the digital economy struggling to attract new entrants as volatility continues.
With the Chairman of the Federal Reserve Jerome Powell indicating that there is no need to reduce interest rates, and the global risks that push investors to tangible assets, experts indicate that Bitcoin is still a high-risk investment until the monetary policy is eased or international conflicts are calmed down.
A note Arthur Hayes says the $300 billion dollar deficit is pushing the price of Bitcoin lower appeared for the first time Cryptonews Arabic.
