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.
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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 ……
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