Altcoins
Arthur Hayes Shares His Top Altcoins
In his latest post dated May 2, 2024, Arthur Hayes, the founder of the BitMEX exchange, shared his thoughts on the recent tumultuous behavior of the cryptocurrency market and the broader macroeconomic signals that shape potential future trends. Titled “Help“, his essay directly addresses the crypto market, which has experienced significant volatility since mid-April.
Stealth Money Printing Begins
Hayes begins by highlighting the distress observable in crypto markets, which he attributes to a confluence of factors including the end of the US tax season, anticipatory fears about the Federal Reserve’s policy decisions, Bitcoin Halving event, and stagnant growth in assets under management (AUM) for U.S. Bitcoin exchange-traded funds (ETFs).
He interprets these factors as a necessary purge of speculative excess, stating: “Tourists will spend the next step on the beach… if they can afford it. We die-hard motherfuckers will hodle and, if possible, accumulate more of our favorite crypto reserve assets like Bitcoin and Ether, and/or high-beta shitcoins like Solana, Dog hat withand dare I say Dogecoin (the OG doggie coin).
A significant part of Hayes’ analysis focuses on the Federal Reserve’s recent adjustment to its quantitative tightening (QT) program. Initially set at a reduction of $95 billion per month, the Fed has reduced that figure to $60 billion.
Hayes interprets this as a covert form of quantitative easing, injecting an additional $35 billion per month into the dollar liquidity pool. He explains: “When you combine interest on reserve balances, RRP payments and interest payments on US Treasury debt, the QT reduction increases the amount of stimulus provided to global asset markets each year. month. »
Hayes also examines the actions of the U.S. Treasury, particularly under Secretary of State Janet Yellen. He discusses the Treasury Quarterly Refinancing Announcement (QRA), which outlines expected borrowings and cash balances for the coming quarters. For the second quarter of 2024, the Treasury plans to borrow $243 billion, a figure Hayes points out is $41 billion higher than previously forecast, due to lower-than-expected tax revenue.
He predicts that this increased supply of Treasuries could lead to higher long-term rates, a situation that Yellen could counter with yield curve control measures — a scenario that could catalyze a significant rise in the prices of Bitcoin and cryptocurrencies.
Hayes discusses the failure of First Bank of the Republicstressing that the response of monetary authorities is a key indicator of systemic fragility. He criticizes the federal safety net that ensures all depositors are compensated, saying it masks deeper vulnerabilities within the U.S. banking system and leads to a stealth form of money printing, as uninsured deposits are actually guaranteed by the government. Hayes argues that this is a fundamental misalignment that could lead to significant inflationary pressures.
Buy cryptocurrencies in May and go
Hayes is candid about his investment strategies in the current environment. He advocates buying now. “I’m buying Solana and Doggie coins for momentum trading positions. For longer-term shitcoin positions, I’m increasing my allocations to Pendle and will identify other “sell” coins. I’m going to use the rest of May to increase my exposure. And then it’s time to set it, forget it, and wait for the market to realize the inflationary nature of recent US monetary policy announcements.”
He concludes with a general prediction that, despite recent market volatility, the underlying liquidity conditions created by U.S. monetary and fiscal policies will provide a floor to cryptocurrency prices, leading to a gradual upward trend. “While I don’t expect crypto to fully realize the inflationary nature of recent U.S. monetary announcements immediately, I do expect prices to bottom out, fall, and begin a slow rise,” says he, signaling his bullish outlook.
For Bitcoin, Hayes predicts that the leading cryptocurrency will regain the key $60,000 level and then move in a range between $60,000 and $70,000 through August due to the annual summer lull.
At press time, BTC was trading at $59,393.
Featured image by Onooki, chart from TradingView.com