Arthur Hayes: Bitcoin Has Hit Bottom Because "Everyone Who Could Be Broke Is Broke"

The former CEO of BitMEX thinks the price of bitcoin may have reached a bottom after most "irresponsible entities" ran out of bitcoin to sell.

Arthur Hayes: Bitcoin Has Hit Bottom Because "Everyone Who Could Go Broke Has Gone Broke" News

Arthur Hayes, former CEO of crypto derivatives platform BitMEX, believes that the worst of the cycle for bitcoin may be over, as the "largest and most irresponsible entities" have sold off all the bitcoins they could.

"Looking ahead, almost everyone who could go broke has gone broke," he said in a Dec. 11 interview with crypto advocate and podcast host Scott Melker.

Hayes elaborated on his position, explaining that when centralized lending companies (CELs) have financial problems, they typically take back their loans and then sell BTC because it is "the reserve asset in the crypto space" as well as "the most pristine asset and the most liquid asset ".

"When you look at the balance sheets of these heroes, there's no bitcoin on there because they sold it in bankruptcy, they sold it in the wave before the bankruptcy."

Hayes expressed a similar sentiment in a Dec. 10 blog post, explaining that while this "credit crunch crisis is ongoing," CELs trying to avoid bankruptcy and trading firms that have had their loans recalled and must liquidate their positions are selling bitcoin in bulk on the exchanges.

"That's why the price of bitcoin plummeted before CEL went bankrupt. It was a big move," he said.

"I can't prove that all the bitcoins held by these failed institutions were sold off in the multiple crashes, but it does look like they did their best to liquidate the most liquid cryptocurrency collateral they could prior to the bankruptcy."

Hayes argues that the massive liquidation is over, but explains in his blog post that "if you desperately need fiat currency, you have no reason to keep holding it."

The market is still deep in a crypto winter following the collapse of cryptocurrency exchange FTX and its aftermath, but Hayes believes the market could see some recovery in 2023.

"I believe the U.S. Treasury market will become dysfunctional sometime in 2023 due to the Fed tightening monetary policy," he said, adding, "At that point, I expect the Fed to start printing money and then bitcoin and all other risky assets will spike to higher levels."