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Are you thinking about bottom-grabbing Bitcoin?

Arthur Hayes

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The latest on the market from BitMEX founder Arthur Hayes.

Bottomless

Arthur Hayes, Medium

Wu Zhuocheng, Wu Said block chain

Three weeks ago, I wrote an article called'Maelstrom'"In which I described a thought process to rationalize my crypto portfolio by holding only Bitcoin, ETH, and some copycat coins that I believe in.

While many appreciated my candor and perspective, a few correctly pointed out that my bearish article was on Bitcoin and ETH from ATH Fell more than. 30% It was published a few weeks later. These are my essays, and I want them to be persuasive, backed up by logic and evidence. I'm not here to help you get the market right. I'm here to challenge your perspective, and I hope to help you grow as a trader or investor.

Crypto capital markets are the last free financial markets on earth. All other major asset classes and the intermediaries that help people trade these products have become political targets for governments and central bankers. "When a measure becomes a goal, it is no longer a good measure" -- Goodhart's Law.

Equity, fixed income and currency markets are deeply influenced by central banks and banks that are "too big to fail". This means they can run unlimited leverage on the backs of taxpayers, with the consequence of inflation caused by recklessly printing money. These banks' balance sheets are used to fix asset prices at levels that achieve political equilibrium. This benefits the rich, because ownership of financial assets in any society is highly concentrated among the richest. 10% Even & have spent 1% Of our citizens.

Crypto assets are entirely in TradFi Out of the system, so it finds a market clearing level before stocks or bonds. Crypto assets are now a real asset class, traded by regular people like us, hedge fund gurus and a handful of sell-side banks.As the last truly free financial market, crypto assets will find a clearing price that reflects the ups and downs of the current macroeconomic environment much earlier than all other assets.

My belief in the above presents me with a conundrum.

The crypto market fell sharply in the first three weeks of the year. Us stocks -- S&P & NBSP; 500 Index and Nasdaq; 100 Index -- just below its all-time high. The stock market has certainly not entered a true bear market. But the capital losses suffered by crypto holders suggest that the Fed's withdrawal of dollar liquidity in its new fight against inflation will hit stock index holders in the short term.

That's good. But the Fed hasn't even stopped buying bonds or raised its policy rate. If I wait until the market expects the Fed to raise rates. 3 Will you be too greedy to miss the perfect entry point for clean crypto assets in exchange for dirty fiat money? I can't deny that if Bitcoin trades below & NBSP; 3 Ten thousand dollars, ETH lower than 2000 Dollars. My finger on the buy button gets really excited. But does this impatience fit with the probabilistic map I have in my head about the future?

This article tries to give people more flexibility in deciding when to bottom hunt.

The president held a separate press conference last week and affirmed that it was the Fed's responsibility to tame inflation. Whether you believe the Fed is responsible for high inflation in the US or not. 100% And can use their policy levers to act, the Fed in policy must raise interest rates. The Federal Reserve will never make any policy decisions. 100% They always leave room to change their minds in the event of a major event in the financial markets.

The question becomes: will the Fed be able to 3 Publicly change its future restrictive monetary policy before the monthly meeting? At the March meeting, everyone expected the Fed to raise its policy rate. 0.25%. Here are three scenarios in which the Fed could change direction:

1. Standard & Poor's & NBSP; 500 Index and Nasdaq; 100 The index is down at least 30% from its all-time high (STANDARD & Poor's & NBSP; 500 Index for & have spent 3357 & have spent Dot, Nasdaq & NBSP; 100 Index for & have spent 11601 & have spent Point).

2. The U.S. Treasury or money markets collapse.

3. Spreads on investment-grade and speculative-grade bonds have widened sharply.

I have elaborated on the importance of the first and second points to the US and global economic model. If either happens, it is widely believed that the Fed could restart the printing presses against the political will of the ruling party. Less talked about is the corporate credit sector, largely because everyone thinks the Fed is in the business. 2020 Years & have spent 3 This problem was solved when the market was nationalised in January.

The Fed nationalised America's corporate-bond market by backing all investment-grade debt and saying it could buy speculative-grade debt. The following two charts show how nationalisation has squeezed. CDS Spreads. CDS Spreads are a good indicator of how much a company with a given rating must pay to issue bonds.

Speculative grade base point

Investment grade basis point

Faced with an epidemic of unknown severity (red changes), the market began to demand high interest payments from corporate borrowers. The Fed says "no, no, no, no", the market is at the wrong level - let's nationalize it by providing unlimited money printing. Spreads fell and big companies maintained easy borrowing conditions. Unfortunately for small businesses, they don't have access to the institutional credit market, so they get ripped off. Only recently did the market move sideways.

If the Fed publicly says it will shrink its balance sheet, how can it maintain its commitment to support corporate debt issuance? This support must be the purchase or threat of purchase of all eligible corporate bonds as defined by the Fed. Markets have recognised this inconsistency and yields have started to edge higher.

This is a problem because to the. 2022 Years, about worth something. 3324.2 & have spent $100m of non-financial US corporate debt maturing (source: Bloomberg). Companies either pay back investors with cash on hand or issue new debt to pay off old debt. In order to & have spent 2021 The total amount of debt that has to be rolled over for the year is based on annual issuance statistics (source: SIFMA). 17%.

Few companies have the pricing power to offset wage and commodity inflation, which is bound to squeeze margins. So as inflation continues to wreak havoc in the US and the world, there will be less free cash flow to repay bondholders. If the Fed does not actively curb spreads by expanding its balance sheet, markets will demand higher rates on new issues.

The scariest scenario for the Fed would be for markets to anticipate tighter monetary policy earlier and demand higher and higher interest rates on corporate bonds. If companies can't finance themselves, they will curtail their activities, which means losing their jobs at a very politically inopportune time. Inflation doesn't necessarily mean that someone will lose their job, but if a company can't raise money because the business can't handle the interest rates the market demands, then the company will lay off employees.

I think, politically, The rate of unemployment; 7% Inflation is even worse. The Fed and their power brokers may soon be forced to choose between more inflation or a wave of job losses following the collapse of the credit markets. My bet is that loose monetary policy will return, which is positive for the crypto market as we know it. Market conditions move very quickly and spreads widen rapidly if the market believes the Fed is not supportive of corporate issuance.

The strategy is not to wait for the Fed to announce a public change of heart, but to use the signals provided by the indices as signs of an imminent shift. Crypto assets will pick up these signals and move higher ahead of the Fed's public announcement of its policy changes.

Support: Bitcoin & NBSP; 28500 & have spent Dollar, Ethereum & NBSP; 1700 & have spent The dollar.

I don't think we will see a bottom until those levels are retested. If the support holds, great, the problem has been solved.If not, then I believe bitcoin and Ethereum will fall as they are liquidated. 20000 & have spent The dollar and & have spent 1300 & have spent The dollar.As for bitcoin and Ethereum falling through the cracks; 2017 The & have spent ATH ( 2 Ten thousand dollars. 1400 & have spent Dollar), which I don't even want to consider.

Or maybe bitcoin and Ethereum won't break again. 3 Ten thousand dollars. 2000 & have spent Dollar, the market will never develop as expected. Then the market hasn't explicitly tested previous lows, and that gets tricky. Depending on your ideological view of capital markets, you may look at one or more statistics, such as: total open position in contracts, net Stablecoin inflows on trading platforms, asset size on particular trading platforms, implied versus actual volatility, etc.

One can imagine bitcoin and ETH holding the bottom of the current trend channel when the Fed turns on the spigot, but I'm sure that's not going to happen. We have to be more flexible about what signals will give us confidence so that we can buy, buy, buy.

But as I write this, the market is bottomless. Traditional markets have not spooked the Fed enough to stop inflation. In terms of price action, in my years as a crypto capital market participant, selling has come in waves. This past weekend, brutal as it was, didn't break the bull market's soul.

Remember, the marginal seller decides the price. If their bond and equity portfolios take a hit, institutions with small holdings of crypto assets will not hesitate to spit them out.They haven't started selling yet (they're off on weekends), and the negative headlines in the mainstream financial media haven't provided the confirmative bias these sellers need to deal with the downside volatility of crypto assets. Correlation is coming, but not yet. If STANDARD & Poor's; 500 The INDEX and the Nasdaq continue to slide towards the end of the quarter, so watch out if it's tied to a post by an Hermes tie or nailed to the ground by louboutin heels...

Sell assets that have skyrocketed to prevent further declines.