- Weakness in tech will pull bitcoin down to $30,000 over the coming months, says BitMEX co-founder Arthur Hayes.
- He said bitcoin has been highly correlated with the Nasdaq 100 and tech stocks are still vulnerable to rising rates.
- He said for protection that he’s buying “crash” puts on both bitcoin and ether.
Bitcoin has been tightly correlated with large-cap technology stocks, making the cryptocurrency vulnerable to a big decline as that sector comes under renewed pressure from rising interest rates and other factors, says Arthur Hayes, the co-founder of crypto exchange BitMEX.
Hayes in a blog post Monday said he foresees tech stocks being dragged lower by rising nominal interest rates, worsening global fiat
conditions, and falling economic growth.
Hayes showed charts illustrating the tight relationship between bitcoin and the Nasdaq-100 index over a 10-day, 30-day, and 90-day period, and pointed out the “high” short-term, or 10-day, correlation.
“For me to hoist the flag in support of selling fiat and buying crypto in advance of an NDX meltdown (30% to 50% drawdown), correlations across all time frames need to trend demonstratively lower,” he wrote.
“As long as the 10-day correlation stays high, we must stay defensive on our crypto positioning,” wrote Hayes who said bitcoin could test the $30,000 level by the end of the second quarter in June of this year. Bitcoin on Monday traded at around $41,100.
is raising interest rates to tame high inflation while pulling back on quantitative easing, actions set to put further pressure on tech stocks. The Nasdaq-100 so far this year has lost nearly 14%, although it has clawed back from its slump of 20% which marked a drop into a
The “Fed isn’t planning to grow its balance sheet again any time soon, meaning equities ain’t going any higher,” he said. Global growth, meanwhile, will be hurt by higher commodity prices driven by the ongoing and possible escalation of Russia’s war against Ukraine.
“There isn’t much science to these numbers other than a gut feeling,” he said. Nevertheless, he said he’s buying “crash” June 2022 puts on bitcoin as well as on altcoin ether, which he sees falling to $2,500 by June of this year.
Arthur Hayes and BitMEX co-founder Benjamin Delo in February pleaded guilty to federal charges of failing to establish an anti-money laundering program at BitMEX. Hayes and Delo each paid criminal fines of $10 million.