Bitcoin is currently unlikely to revisit the $77,000 price level anytime soon, as the Federal Reserve has indicated a slowdown in quantitative tightening (QT), according to Arthur Hayes, co-founder of BitMEX. On March 10, Bitcoin dipped near the $77,000 mark for the first time since November, as reported by CoinMarketCap.
“Was BTC $77k the bottom, prob,” Hayes commented in a March 20 X post, declaring that QT is “basically over.” Following the Fed's announcement on March 19 to reduce its monthly Treasury cap from $25 billion to $5 billion starting in April, liquidity pressures may ease, positively impacting risk assets like Bitcoin.
This change could provide support for the crypto market as QT involves central banks selling assets to tighten the money supply and potentially increase interest rates. Hayes noted that “the next thing we need to get bulled up for realz is either SLR exemption or a restart of QE.” The Supplementary Leverage Ratio (SLR) exemption was a temporary rule during the COVID-19 pandemic allowing banks to exclude US Treasury securities from their SLR calculations.
Jamie Coutts, chief crypto analyst at Real Vision, echoed this sentiment, stating that “QT is effectively dead.” He explained that “treasury volatility” has calmed down following the recent drop of the US dollar, which is a positive indicator for liquidity.
Optimism is growing among other crypto advocates, including Jeff “JiHo” Zirlin, co-founder of Axie Infinity, who remarked that the Fed's slowdown is beneficial for both crypto and equity markets. He stated, “The Fed has significant leeway to loosen up, providing more support for businesses + markets.” Meanwhile, Bitcoin venture capitalist Mark Moss warned that with QT ending, “the dam is going to break.”
The overall sentiment in the crypto market has surged following the Fed’s comments. The Crypto Fear & Greed Index, which measures market sentiment, has transitioned into “Neutral” territory at 49, after being in the “Fear” zone since February 26.
Despite Bitcoin being down nearly 22% from its January all-time high of $109,000, Kain Warwick, founder of Infinex, stated that this is merely a “normal mid-bull correction.” He added, “I would need to see a much larger breakdown to flip bearish,” maintaining that he believes the four-year cycle will hold, indicating continued growth through the rest of the year.
Disclaimer: This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research.
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