BitMEX co-founder Arthur Hayes warned about the potential short-term correction of Bitcoin (BTC). In a recent blog post, he suggested that the cryptocurrency market might experience a 'sideways or downward period' due to liquidity contraction until the Jackson Hole Economic Symposium in August. Hayes noted that buying pressure is weakening and Bitcoin could potentially adjust to around $90,000.
He cited the potential expansion of the U.S. Treasury's General Account (TGA) and the Federal Reserve's monetary policy direction as key reasons. As the TGA balance increases, market liquidity could rapidly decrease, which might negatively impact Bitcoin and other risk assets. Hayes predicted that this liquidity contraction could trigger a short-term bearish market, followed by a strong rebound after filtering out weak sellers.
A notable development is the traditional financial institutions' movement to issue stablecoins in a regulated format. Hayes specifically mentioned the recently passed GENIUS Act in the U.S. Senate, which would allow major banks like JPMorgan ($JPM) to directly issue USD-pegged stablecoins. Unlike existing USDT and USDC, these bank-issued stablecoins are expected to have higher credibility due to Federal Reserve system accessibility and regulatory foundation.
The expansion of bank-led stablecoins could reshape cryptocurrency market liquidity. Hayes pointed out that banks could implicitly supply liquidity by reinvesting customer deposits in short-term government bonds while avoiding accounting capital regulations. This could be interpreted as a new form of quantitative easing (QE) that could significantly expand the potential fund pool for high-risk assets like cryptocurrencies and tech stocks.
He stated that if even a portion of the $17 trillion deposited in U.S. banks were converted to stablecoins, it could lead to up to $680 billion in Treasury bond purchase demand. He emphasized that this could spark a new bullish market for cryptocurrencies.
Bitcoin is currently trading around $107,000, and while short-term volatility and correction possibilities exist, the medium to long-term outlook remains optimistic. Hayes believes Bitcoin could reach $1 million by 2028 but noted that it would need to withstand multiple 'bearish pressures' to get there.
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