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Arthur Hayes projected that Bitcoin and altcoins could rally from September due to a likely increase in US liquidity injection.
Since April, Bitcoin (BTC) has been range-bound within $60K-$70K, occasionally dropping below $60K. During this period, most altcoins have suffered massive sell-offs, with some plummeting over 50%. However, BitMEX founder Arthur Hayes said this market trajectory could shift for the better from September. Part of his latest blog read:
“I expect that crypto will exit its sideways-to-downward trajectory starting in September.”
Hayes’s outlook was based on a likely uptick in US liquidity (money supply) injection towards the year.
Hayes: How US Liquidity Could Change BTC Trajectory
Hayes tracked key monetary tools like US Treasury bills (T-bills) issuance and the Fed’s RRP (Reverse Repurchase Agreement) to give an overview of the historical impact of US liquidity on BTC.
For perspective, T-bills are securities offered by the government to raise money needed to fund its fiscal deficits (overall spending). More T-bill issuance would increase the money supply for government spending and boost liquidity. However, a decline in issuance would drain liquidity.
On the other hand, RRP is a monetary tool the Fed uses to control the supply of money in circulation. It’s issued to banks, allowing financial institutions to offer loans to the Fed. An increase in RRP volume would mean reducing liquidity.
Between April and June 2024, there was a net negative T-bill issuance, translating to reduced US liquidity.
Per Hayes, this led to BTC and the crypto market’s muted price action.
“As a result of a net reduction in T-bills outstanding, liquidity was removed from the system,” he wrote.
There was also a close correlation between T-bills, RRP, and BTC price action. Hayes noted that T-bills issued increased in Q1, coinciding with a drop in RRP, and saw BTC pump record highs in March.
However, the opposite trend has played out since April.
“From April to July, when T-bills were net withdrawn from the market, RRP rose, and Bitcoin traded sideways, punctuated with a few intense dips,” Hayes noted.
That said, the US Treasury is expected to net-issue $301 billion in T-bills between now and the end of the year. According to Hayes, this would increase liquidity and push BTC to $100K.
How about Altcoins and the elusive Altcoin season?
When will Altcoin Season Begin?
The liquidity would also boost altcoins and trigger the elusive altcoin season. However, Hayes projected that Alt season would only happen if BTC decidedly broke above $70K and ETH climbed above $4K.
Additionally, he noted that SOL could also rally above $250, offering a market-wide relief to the altcoin market.
Given the liquidity outlook, Hayes planned to grab discounted buys during Summer dips and sell off at the height of the October pump before the November US election spoils the party.
