Bitcoin Won’t Bottom Until It Retests $28,500, Believes BitMEX Co-Founder Arthur Hayes

Arthur Hayes – co-founder of BitMEX – just gave an interesting Bitcoin price forecast in his bi-weekly analysis. Despite his expectations that the Federal Reserve won’t raise interest rates, he still doubts Bitcoin’s bottom will arrive until a $28,500 retest.

Calling the Fed’s Bluff

In BitMEX’s latest post from Crypto Trader Digest titled “Bottomless,” the former CEO extols cryptocurrencies as the “last free market on earth”. He explained that due to “wanton” money printing, large banks and governments are able to capture other asset prices at “politically expedient levels”.

Afterward, he recognizes that while cryptocurrencies are down significantly in recent weeks, the Federal Reserve hasn’t even raised rates yet. Therefore, he suspects that there could be more carnage to come in the markets when March’s expected rate-hike actually arrives.

However, he also expressed doubt as to whether the Fed actually has the ability to raise rates without blowing up the markets.

“If the Fed publicly stated it will contract the size of its balance sheet, then how can it maintain its pledge to backstop corporate issuers?” said Hayes. “The market has woken up to this inconsistency, and yields have begun a small breakout to the upside.”

Hayes predicts the Fed will opt to continue easy monetary policies out of political expediency, despite its claims to the contrary. As history has proven, news of rising inflation tends to be a positive for Bitcoin’s price.

Another FOMC meeting will take place later today, which markets await anxiously. Hayes suggests that investors not wait for the Fed to announce it has changed its mind, and to expect crypto to pick up “well in advance” of that.

Floor Below $29k?

Hayes sees Bitcoin’s next true resistance level at $28,500 – approximately where it bottomed in July of last year. Should this level be broken, he expects a liquidation cascade that could possibly take Bitcoin back down to $20k – its 2017 high.

“If either of Bitcoin’s 2017 and Ether’s 2018 previous ATH ($20,000 and $1,400 respectively) are breached on a daily candle, then I don’t even want to think about it,” he said.

Bitcoin is currently trading above $38k – a significant rebound from its low at $33k days ago.