Bitcoin is not expected to approach the $77,000 mark again in the near future, especially after the Federal Reserve indicated a deceleration in its quantitative tightening (QT) measures, according to the co-founder of BitMEX, Arthur Hayes.
On March 10, Bitcoin (BTC) fell close to the $77,000 threshold for the first time since November, based on recent data.
Hayes remarked on March 20 that “Was BTC $77k the bottom, probably,” following the Fed’s announcement on March 19 that starting in April, it will reduce its securities sell-off by lowering the monthly Treasury cap from $25 billion to $5 billion, suggesting that QT is “essentially over.”
Bitcoin has increased by 3.53% over the past week.
This shift may alleviate liquidity constraints and help support riskier assets like Bitcoin since QT typically involves central banks selling assets to curtail the money supply, potentially leading to higher interest rates.
“For us to see a real bullish trend, we need either Supplemenary Leverage Ratio (SLR) exemptions or a resumption of quantitative easing (QE),” Hayes continued.
The SLR exemption was a temporary pandemic-era rule that allowed banks to exclude US Treasury securities from their SLR calculations. In contrast, quantitative easing (QE) is a monetary strategy aimed at stimulating the economy and increasing spending.
Real Vision’s chief crypto analyst expressed a similar viewpoint, stating in a March 19 post that “QT is practically finished.” He added that recent “treasury volatility” has stabilized following a dip in the US dollar earlier this month, which is a positive sign for enhancing liquidity.
Among the bullish voices was Axie Infinity co-founder Jeff “JiHo” Zirlin, who noted that the Fed’s slowdown is “beneficial for both crypto and stock markets.”
“The Fed has considerable room to ease up, which provides more backing for businesses and markets,” Zirlin commented, while Bitcoin investor Mark Moss stated that with the end of QT, “the dam is about to break.”
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In the meantime, crypto market sentiment has surged following the Fed’s recent statements.
The Crypto Fear & Greed Index, which monitors overall sentiment, has moved into “Neutral” at 49 after residing in the “Fear” sector since February 26.
Even though Bitcoin is down nearly 22% from its January peak of $109,000, Kain Warwick, founder of Infinex, stated that this is a “normal mid-bull correction.”
“I would need to see a much larger downturn to become bearish,” Warwick said. “My foundational thesis is that the four-year cycle will hold once more, suggesting continued upward movement throughout the year.”
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This article is not intended as investment advice or recommendations. All investment and trading actions carry risk, and readers should conduct their own research prior to making any decision.