Former CEO of BitMEX, Arthur Hayes, believes Terra’s collapse resulted from the macroeconomic atmosphere amidst the Fed’s increased rates and secured its balance sheet.
He is also of the opinion that conviction on the wider market in the medium and long term, emphasizing that Ethereum could still touch the mark of $10,000 by the year-end. According to him, the market currently is either at the bottom of the cycle or near it, and a comeback will start once the Fed slows down the rate hiking process.
The former CEO also predicted in his recent blog that the Fed would continue the speedy process of increasing interest rates during the whole of Q3, making the current downward pressure imposed on the crypto market more intense. Hayes also mentioned the possibility that the incident of UST decreasing might is pointing towards a local bottom.
He also acknowledged that the most probable cause of the Terra meltdown could be the wider risk-off environment that pushed VCs to cash in LUNA investments together, ultimately resulting in a liquidity crisis that brought the prices of stablecoins to the bottom.
In addition, he said that once the stablecoin was depegged, people rushed to swap their UST for other stablecoins or fiats, which led to the worsening of the situation leading to the crash of LUNA, its sister token.
The collapse of TerraUSD was an indirect consequence of central bank liquidity tightening worldwide. Further, he stated that he believes that event has brought suffering that ultimately would have occurred some months past the line as other organizations, including the Fed, continue to tighten liquidity conditions.
But, he also made it clear that the strict policies of the FED actually acted as a catalyst indirectly as the final key factor that led to the Terra Collapse. “Its collapse was preordained because of how it was programmed,” he added.
Concluding, Hayes explains that the crypto has started to decouple from the wider risky assets and cited such an observation as an indicator of the potential local bottom. He arrived at this conclusion by analyzing the correlations between Bitcoin/Ether and the Nasdaq 100 while the recent global equity selloff was going on.
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Source: https://www.thecoinrepublic.com/2022/06/04/heres-why-former-bitmex-ceo-arthur-hayes-thinks-thinks-ethereum-can-still-reach-10000-by-2022-end/