Arthur Hayes, former CEO of BitMEX posted an additional prediction about Bitcoin and Ethereum. At the same time, the top cryptocurrencies by market cap continue moving in a tight range with today’s U.S. Consumer Price Index (CPI) increasing volatility across the board.
TA: Bitcoin Resumes Decline, Why BTC Could Revisit $40K| TA: Bitcoin Resumes Decline, Why BTC Could Revisit $40K
Bitcoin is trading at $40,000. There has been a loss of 1% in 24 hours and 13% in one week. Ethereum trades for $3,000 and has had a similar track record over the same period.
As NewsBTC has been reporting, Hayes believes the current financial system supported by the “Petrodollar” has ended. A new system that supports independent currencies like Bitcoin and Ethereum will be in demand has resulted.
Ethereum will see the greatest benefits in the near term, as it transitions to a Proof-of-Stake consensus algorithm. Thus, it’ll see a 99% decline in its energy consumption with a staking system that will yield rewards to network validators.
Hayes stated that institutions will be able to shelter themselves from inflation by using the system. As the U.S. Federal Reserve tries to curb inflation, there will be an increase in selling of top cryptocurrency in the near to medium-term.
It will result in a market that is volatile when the FED begins its tightening process. According to the ex-executive at BitMEX, Bitcoin and Ethereum are highly correlated with traditional markets such as the Nasdaq 100 Index. (NDX).
This means that crypto trading is like a large tech company. Hayes thinks this correlation must trend downward before Bitcoin or Ethereum can rise to new highs.
The traditional market and the NDX will both be plunged into red before that occurs, potentially resulting in drawdowns between 30% and 50%. BTC and ETH will need to retest critical support areas at approximately $30,000 or $2,000 each.
Evidence of the Ethereum and Bitcoin Carnage
Hayes asserts that the NDX’s one-year chart shows potential weakness as evidence of the upcoming financial crisis. This suggests that further losses could be expected as the Index did not break the 61.8% Fibonacci retracement. Hayes said:
According to the chart, I believe that the NDX will fall further, reach its lowest level, then break below it. I believe the next stop after that is to test 10,000 (…). The crypto capital markets remain the world’s only open markets. They will cause equities to fall as we enter the downturn and rise as we get out. Bitcoin and Ether are likely to bottom before the Fed changes its policy and makes it looser.
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Hayes has previously said that Bitcoin and Ethereum will eventually hit $1,000,000 per coin. The FED, which appears to be stuck in its current state and the resolution of the Ukraine/Russia war are two important factors.