Hayes: Alt Season Won’t Return Until Bitcoin Hits $70K, Ethereum $4K

Former BitMEX CEO Arthur Hayes believes altcoins won’t see a resurgence until Bitcoin surpasses $70,000 and Ethereum breaks through the $4,000 mark.

In a recent blog post, the crypto billionaire said that both Bitcoin and Ethereum have shown resilience despite recent market corrections, largely due to structural support from inflows into U.S.-listed exchange-traded funds (ETFs).

“During this cycle, Bitcoin and now Ether have structural bids in the form of net inflows into US-listed exchange-traded funds (ETF),” he wrote.

Hayes Expects Solana to Reach $250

Hayes also claimed that Solana could resume its uptrend and reach over $250.

However, he argued that the market-wide impact of a Solana rally is far less significant compared to the wealth effect generated by Bitcoin and Ethereum due to their larger market capitalizations.

Hayes suggests that a dollar liquidity-driven rally in Bitcoin and Ethereum towards the end of the year will set the stage for the return of an “alt season” or a widespread surge in altcoin prices.

Bad Gurl Yellen is full of $ liq and she is a squirter. "Water, Water, Every Where" is an essay on how she will soak the markets with $300bn to $1.05tn btw now and year end.https://t.co/U04IAYgwDQ pic.twitter.com/hgFISCkwXN

— Arthur Hayes (@CryptoHayes) August 13, 2024

In terms of his trading strategy, Hayes plans to capitalize on the current market conditions.

He believes that as U.S. Treasury bills (T-bills) are issued and the Treasury’s buyback program proceeds, liquidity in the financial markets will improve, potentially leading to a stronger crypto market starting in September.

With the U.S. presidential election in November, Hayes anticipates increased market manipulation by Treasury Secretary Janet Yellen in October, aiming to boost the stock market.

Hayes intends to take profits from his more speculative trades during this period, particularly in October, and shift his capital into more stable assets like staked Ethena USD (sUSDe).

He expects the U.S. debt ceiling to be raised early next year, which he believes will trigger a significant influx of liquidity from the Treasury and possibly the Federal Reserve, setting the stage for a major bull market in cryptocurrencies.

Hayes Remains Bullish on Digital Assets

In the blog post, Hayes also delved into the relationship between the U.S. Treasury Department and the Federal Reserve, emphasizing the significance of fiscal dominance, where the necessity to fund the government outweighs the central bank’s concerns about inflation.

As the debt-to-GDP ratio surpasses 100%, the Treasury, which controls debt issuance, gains more power, eventually instructing the Federal Reserve to support government spending by expanding the money supply.

He said this shift was accelerated by the COVID-19 pandemic, which pushed debt levels higher.

Hayes noted that the focus is on how Treasury Secretary Janet Yellen might manage liquidity to sustain economic growth and lower the debt-to-GDP ratio.

This includes leveraging programs like the Reverse Repo Program (RRP) and issuing Treasury bills (T-bills) to inject liquidity into the financial markets.

The crypto billionaire said that Yellen’s actions, aimed at boosting nominal GDP growth, will likely benefit risk assets, including cryptocurrencies like Bitcoin.

“We know that $301bn of T-bills will be net issued between now and year-end,” he wrote.

“If this relationship holds true, Bitcoin will quickly retrace the dump caused by the yen strengthening. The next stop for Bitcoin is $100,000.”