- Arthur Hayes blames liquidity issues and tensions in the Middle East for the BTC decline.
- Tensions in the Middle East remain a key factor in BTC’s near-term price performance.
Bitcoin [BTC] has had a positive price correlation with gold in recent days. However, the correlation decoupled last weekend as BTC plunged while gold pumped.
At the time of writing, BTC was trading at $63,000, down more than 15% from its record high of $73.7k in mid-March.
BitMEX founder and crypto investor Arthur Hayes, accused the price collapse and the BTC/Gold decoupling on US tax payments and the tensions in the Middle East.
“BTC and GOLD in lockstep until…weekend before April 15 tax payments due in the US.” But that same weekend, war tensions rose between Israel and Iran, and BTC crashed while $GOLD was closed.
GOLD opened high on Monday while BTC fell again. BTC still works, people just need to pay their taxes.”
Liquidity squeeze during BTC halving
Last week, Hayes noted that the BTC halving, scheduled for around April 19, coincided with a “period when dollar liquidity is tighter than usual.”
He cited US tax payments in mid-April as one of the catalysts that would drain liquidity from the market;
“Add fuel to a rapid fire sale of crypto assets.”
Tensions in the Middle East accelerated his forecasts.
As tensions escalated, about $143 billion was wiped from the crypto market last Saturday, according to Trading View data. The total crypto market capitalization was barely over $2.2 trillion at press time.
As always, Bitcoin opponent and financial commentator Peter Schiff couldn't stop himself from using the drawdown to criticize BTC investors. He specified;
“Bitcoin is trading below 27 ounces of gold. Since the record high of 37 ounces of gold 2.5 years ago, the price has fallen by over 27%. Given all the hype surrounding Bitcoin and the lack of coverage of gold, few may realize that Bitcoin is in a secret bear market when the price is in real money.”
Nevertheless, Hayes had previously predicted that the liquidity crisis would ease in early May.
However, BTC appears to have priced in Middle East tensions and the psychological support of $60,000 is crucial for bulls.
Additionally, ETF flows have dried up as US spot BTC ETFs recorded net outflows of $36.7 million on April 15.
So a full-blown crisis in the Middle East could potentially push it below $60,000 with massive discounts.
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