Has Bitcoin Bottomed Out? Ex-BitMEX CEO Arthur Hayes says the Terra (LUNA) fiasco offers a clue
Former BitMEX CEO Arthur Hayes says the collapse of Terra (LUNA) hints at Bitcoin (BTC) price bottom.
In a new commentary on Bitmex’s Crypto Trader Digest, Hayes says that the decoupling of Bitcoin and Ethereum (ETH) from the stock market, historical prices and negative sentiment towards digital assets all indicate that crypto has bottomed.
“My bottom checklist:
- Bitcoin / Ethereum are moving increasingly less correlated against the Nasdaq 100.
- Current price levels are very close to the all-time highs of the previous cycle.
- The mainstream financial media boasts about how stupid and greedy plebs who made short-lived fortunes investing in crypto were.”
In May, Luna Foundation Guard sold most of its bitcoin reserves to maintain its peg to stablecoin TerraUSD (UST). Hayes says the Terra meltdown suggests the lowest bitcoin that could go in the current cycle.
“The bottom line is that a normally impenetrable strong hand can be forced to sell because of uneconomic deals festering in their trading books. LFG is one such seller. Puking up 80,000 physical bitcoins is quite an achievement. After thinking about the manner in which these bitcoins were sold, I am even more confident that the $25,000-$27,000 zone for bitcoin is the bottom of this cycle.”
Hayes says crypto will not recover immediately as traders try to erase losses during bear market rallies.
“Right now, many traders are sitting in positions that are down 50% to 90%. These traders are in a loss mitigation mindset. They want to get out at a less bad price. They are mentally unprepared to ship more capital at these “bargain” prices. So every rally is sold until the undergrowth in the forest is clear and the diamond hand monkeys can safely emerge from hibernation.”
He says he’s still confident that crypto prices will bounce back, but it’s worth the wait.
“You don’t want to sell dirty fiat and buy Bitcoin/Ethereum early only to be shaken out of a lack of confidence in your investment thesis. It is better to wait for the devil’s high clergy to give the all-clear that it is time to join the crusade.”
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