Bitcoin Drops Below $64,000, But Arthur Hayes Advocates ‘Buy The Dip’
June 21 2024 - 10:00AM
NEWSBTC
Bitcoin is experiencing a significant decline today, dipping below
the $64,000 mark to a low of $63,564. This drop represents a 2.5%
decrease in the last 24 hours and an overall 12% decline over the
past two weeks. Amidst this downward trend, Arthur Hayes, the
co-founder of BitMEX, is not only maintaining his bullish stance on
Bitcoin but actively encouraging investment, advocating a strategy
to ‘buy the dip.’ His optimism and advice are deeply rooted in an
analysis of global economic conditions and central bank policies,
which he believes will favor cryptocurrencies like Bitcoin. Buy The
Bitcoin Dip? Hayes’s insights draw attention to the aggressive
monetary policies implemented by central banks, particularly the US
Federal Reserve. These policies, including rapid interest rate
hikes—the most aggressive since the 1980s—were initiated in
response to rising inflation in the United States. The hikes have
had a profound impact on the bond market, particularly affecting US
Treasuries (USTs), which saw a decrease in prices due to the rising
yields. Japanese banks, in search of yield amid domestically
near-zero interest rates, had heavily invested in these USTs.
Related Reading: 3 Reasons To Invest In Ethereum, 1 To Stay
Bitcoin-Only: Bitwise CIO The strategy backfired when US rates
rose, leading to significant paper losses for these banks. Hayes
specifically points to the situation with Norinchukin Bank, which
was compelled to sell off $63 billion in foreign bonds, mostly
USTs, to reduce these losses. This scenario underscores a broader
trend among Japanese banks, which may need to continue offloading
USTs and other foreign bonds as they adjust to the new economic
realities imposed by US monetary policy. Hayes argues that these
developments have critical implications for the crypto market,
particularly Bitcoin. He notes that the responses by central banks
to stabilize financial markets—such as the Federal Reserve’s
decision to provide a blanket backstop in March 2023 following a
series of bank failures—indirectly benefit cryptocurrencies. This
intervention led to a surge in Bitcoin’s price, reinforcing its
status as a viable alternative investment during times of financial
instability. Moreover, Hayes points out the operational details of
the FIMA repo facility, which was expanded by the Fed to bolster
liquidity. He explains, “A rise in the FIMA repo facility indicates
an addition of dollar liquidity to the global money markets. Y’all
know what that means for Bitcoin and crypto … which is why I
thought it necessary to alert readers about another avenue of
stealth money printing.” This mechanism allows central banks to
exchange their holdings of USTs for dollars, increasing the dollar
supply without flooding the market with bonds and potentially
driving up yields. Related Reading: German Government’s Bitcoin
Dump Surpasses $195M As Selling Spree Persists The implications for
Bitcoin and other cryptocurrencies are profound, according to
Hayes. He suggests that as central banks, particularly the Bank of
Japan, might use these facilities to manage their exposure to USTs,
the resultant increase in dollar liquidity could drive investors
towards cryptocurrencies. This movement is seen as a hedge against
potential inflation and currency debasement resulting from these
monetary expansions. Hayes vividly describes the effect of these
macroeconomic maneuvers on the crypto market: “Just as many began
to wonder where the next jolt of dollar liquidity would come from,
the Japanese banking system dropped Origami cranes composed of
crisply folded dollar bills upon the laps of crypto investors. This
is just another pillar of the crypto bull market. The supply of
dollars must increase to maintain the current Pax Americana
dollar-based filthy financial system.” In a rallying call to the
crypto community, Hayes concludes, “Say it with me, ‘Shikata Ga
Nai’, and buy the fucking dip!” Through this declaration, he
underscores his belief that despite the volatile market conditions,
the underlying economic and monetary developments are creating
favorable conditions for Bitcoin’s growth. His analysis suggests
that savvy investors should view the current price drops as buying
opportunities, given the broader economic backdrop that he believes
will continue to propel interest and investment in
cryptocurrencies. At press time, BTC traded at $64,159. Featured
image from Forkast News, chart from TradingView.com
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