Bitcoin’s (BTC) 22% decline since its January peak has reignited debate about its role as a hedge against financial uncertainty. While gold has risen to $3,000 an ounce, Bitcoin has been more volatile than tech stocks, falling along with the Nasdaq.
But BitMEX founder and Maelstrom CIO Arthur Hayes seems unimpressed. He sees the current Bitcoin correction as a temporary liquidity crunch and expects a sharp recovery when market conditions change. Hayes predicts that Bitcoin could hit $250,000 by the end of the year.
“We are experiencing a period of low liquidity fiat money production,” Hayes said in a recent interview with Bitcoin News’ David Sencil, suggesting that Trump-affiliated interests may be stoking recession fears in order to pressure the Fed into taking action.
The end result, Hayes said, will be a return to aggressive quantitative easing. “They’re going to print more money than anyone has ever printed before and they’re going to re-inflate it,” he predicted.
Despite the recent volatility, Hayes expects Bitcoin to bottom before stocks, citing historical liquidity cycles. “We had a big rally from $20,000 to $110,000 and now we’re in a 30% correction. That’s pretty normal for a bull market,” he said.
He believes the Fed will eventually step in to stabilize markets and trigger Bitcoin’s next big rally. “When there’s financial distress, they always print money. It doesn’t matter what the political leanings are,” he said.
The key metric to watch, Hayes said, is not Bitcoin’s price but the return of liquidity. “When the floodgates open, it’s time to act,” he said.
*This is not investment advice.