Bitcoin will Reach $70,000 Soon if the Federal Reserve Cuts Rates

Arthur Hayes, BitMEX’s ex-CEO, recently Suggested that a rate cut by the Federal Reserve could propel Bitcoin to the $70,000 mark, simultaneously rejuvenating the US banking sector. This assertion adds another layer to the ongoing debate among investors about the impending direction of the financial markets. 

Historical trends underscore the symbiotic relationship between the Federal Reserve’s monetary decisions and Bitcoin’s trajectory. Notably, during the pandemic’s fiscal response, Bitcoin’s ascent outpaced the Fed’s balance sheet expansion by an impressive 129%. Such data points underscore the market’s keen response to the Fed’s moves, particularly under Chairperson Powell’s tenure.

Yet, the plot thickened post-March 2022. Bucking the popular sentiment that anticipated a pause in rate hikes, the Federal Reserve surprised markets by implementing three additional hikes. This development spurred a reevaluation among market participants and analysts alike.

A salient query emerged during the Korea Blockchain Week conference: Can Bitcoin’s valuation sustain its upward momentum if central banks, including the Federal Reserve, persist with their hawkish stance? This question gains prominence against a backdrop where the US skirts a recession, inflationary pressures persist, and financial stability remains intact. If these variables hold, it’s conceivable that central banks might maintain their current trajectory.

Drawing from historical parallels, post-WW2 Asian economies, which thrived on exports, leveraged financial repression—a scenario where nominal GDP growth eclipses bond yields. This strategy facilitated affordable capital access for industrial entities, fostering rapid modernization and ensuring job stability.

In this discourse, the ‘Real Yield’—derived by offsetting the Government Bond Yield with Nominal GDP Growth—emerges as pivotal. An analysis using the 2-year US Treasury yield as a proxy indicates that real rates, despite aggressive rate hikes by the Fed, barely remain in the positive territory. A shift to longer tenors, like the 10-year or 30-year yields, reveals persistently negative real rates, dampening the allure of long-term bonds.

Reflecting on the fiscal windfall during the 2020-2021 bull run, the affluent segment significantly bolstered tax coffers. However, 2022 ushered in a paradigm shift with the Fed’s rate hike decision, exerting downward pressure on financial markets. An illustrative chart, benchmarked at 100, delineates the performance trajectory of key indices, including the S&P 500 and Nasdaq 100. This pivot resulted in dwindling capital gains tax revenues, with 2021 data from the US Congressional Budget Office indicating that realized capital gains constituted nearly 9% of the GDP.

Current trends intimate a surge in government expenditure, especially in sectors catering to demographic shifts and a multipolar global order. With escalating expenses and tapering revenues, fiscal deficits are poised to widen. Projections suggest that by the close of the year, the US Treasury will be compelled to introduce bonds worth an additional $1.85 trillion to address legacy debt and the fiscal deficit. As of the second quarter’s culmination, the annualized interest outlay by the US Treasury hovers around $1 trillion.

Decoding this dynamic reveals a cyclical pattern: The Federal Reserve’s inflation-containment strategy, manifested through rate hikes, necessitates augmented bond issuance by the US Treasury at steeper rates. This dynamic inadvertently amplifies nominal GDP growth, driven by affluent segments channeling their interest earnings into service consumption.

Contrary to the prevailing narrative that associates rate hikes with adverse implications for volatile assets like Bitcoin, the cryptocurrency has registered a commendable 29% appreciation since March 10. This resilience suggests that sustained rate hikes by the Fed could plunge real rates further into negative territory.

Market dynamics indicate a pronounced focus on the Federal Reserve’s nominal rate, overshadowing the real rate juxtaposed against the US’s robust nominal GDP growth. This skewed perception might elucidate Bitcoin’s inability to breach the anticipated $70,000 threshold. As the inefficacy of bonds, even with nominal rates at 5.5%, becomes palpable, investors might recalibrate their portfolios in favor of tangible assets like Bitcoin and AI-centric equities.

In summation, while prevailing sentiment leans towards a potential rate cut and a revival of quantitative easing, the robustness of digital currencies, epitomized by Bitcoin, in navigating rate hikes is evident. This evolving dynamic between Bitcoin and Federal Reserve policies, especially in a high debt-to-GDP milieu, suggests a potential recalibration of conventional economic paradigms.

Disclaimer & Copyright Notice: The content of this article is for informational purposes only and is not intended as financial advice. Always consult with a professional before making any financial decisions. This material is the exclusive property of Blockchain.News. Unauthorized use, duplication, or distribution without express permission is prohibited. Proper credit and direction to the original content are required for any permitted use.

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Arthur Hayes: The Federal Reserve is Doomed to Fail

In the realm of financial analysis, few voices resonate as loudly as Arthur Hayes. His recent article, titled “Kite or Board,” has generated substantial buzz in financial circles. Hayes meticulously evaluates the U.S. Federal Reserve, forecasting significant challenges that could jeopardize its future operations. Simultaneously, he highlights Bitcoin’s rising prominence as an alternative in the financial domain.

The Federal Reserve’s Autonomy

Hayes sheds light on the Federal Reserve’s unique position, emphasizing its ability to make decisions that might not always require direct public validation. This degree of autonomy grants the Fed considerable power. However, as Hayes points out, such unchecked authority might sometimes lead to decisions that don’t align with the broader public interest.

Understanding Inflation Tax

The concept of the “inflation tax” is meticulously dissected by Hayes. Inflation, often an abstract concept for many, serves as a silent tax eroding public wealth. Hayes suggests that the majority, especially those unfamiliar with high inflation periods, might overlook this. Such an oversight can make inflationary strategies particularly appealing for policymakers.

Potential Policy Changes

Hayes delves into potential policy shifts that could address inflation. Specifically, he discusses the idea of eliminating interest on reserves and mandating a substantial proportion of deposits to be held as reserves. Such a policy, Hayes postulates, could significantly curb inflationary pressures. The math behind this assertion, as Hayes suggests, is detailed in his article, offering readers an in-depth understanding of the mechanics.

Banks in Transition

With policy shifts, the banking sector’s response becomes pivotal. The banks, guardians of traditional finance, could find themselves at a crossroads. Hayes touches upon this, hinting at the protective measures banks might adopt in light of policies that could potentially impact their profitability.

Bitcoin’s Ascendancy

The crux of Hayes’ argument revolves around Bitcoin’s potential role in this financial tableau. As traditional structures like the Federal Reserve grapple with challenges, Bitcoin, with its decentralized nature, finite supply, and global acceptance, emerges as a promising alternative. Hayes suggests that Bitcoin, free from the shackles of centralized decision-making and inflationary tendencies, could offer a transparent and viable financial system alternative.

The Impending Shift

Central to Hayes’ analysis is his forthright assertion: “I want to show readers how the Fed is doomed to fail, and how the more they try to right the ship using Volkernomics.” This sentiment underscores a significant shift in the global financial paradigm. As the Federal Reserve grapples with its challenges, Hayes believes its potential missteps could pave the way for alternative financial instruments like Bitcoin. The cryptocurrency, in Hayes’ view, is poised to redefine how transactions are conducted and how value is stored, potentially filling the void left by the Fed’s challenges.

Arthur Hayes’ insights present a comprehensive view of the challenges facing the Federal Reserve and the burgeoning role Bitcoin could play in the future. His analysis, rooted in observation and critical evaluation, offers a perspective that resonates with both crypto enthusiasts and traditional finance observers.

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BitMEX Co-Founder Proposes Bitcoin-Backed Stablecoin

Even if authorities are increasing their scrutiny of stablecoins, the community’s persistent interest in stablecoins that are not related to the U.S. dollar is illustrated by Hayes’ idea for the NakaDollar. NakaDollar would be a stablecoin that would not be tied to the dollar. The proposed stablecoin differentiates itself from major reserve-backed stablecoins such as Tether (USDT) and USD Coin by relying on derivatives markets that offer liquid inverse perpetual swaps rather than US dollar reserves as its backing mechanism. This is in contrast to major reserve-backed stablecoins such as Tether (USDT) and USD Coin. This stands in stark contrast to the two big stablecoins that came after it. These sorts of deals are referred to as “liquid inverse perpetual swaps” which is a fancy term for them (USDC).

The combination of short BTC holdings and USD inverse perpetual swaps would serve as the stablecoin that Hayes has suggested using as its underlying structure. In order to maintain the stablecoin’s 1:1 peg to the United States dollar, transactions based on mathematics would be conducted between the new NakaDAO and allowed parties and derivatives exchanges. These transactions would be necessary. The viability of the proposed stablecoin would be contingent on their being both the availability and the liquidity on derivatives markets to engage in the trading of inverse perpetual swaps. This is an essential prerequisite that must be met before the introduction of the stablecoin.

As the cryptocurrency industry continues its unyielding quest of perfection, it is virtually guaranteed that new concepts for stablecoins will emerge at some time in the near future. This might take the form of a new product or an improvement on an existing one. Yet, the regulatory framework that stablecoins operate under is also going through a period of transition. In light of this, it is of the utmost importance that stablecoin issuers make compliance and transparency their top priority in order to both attract investors and stay in line with the regulations that are now in place.


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The Launch of CBDC May Destroy Bitcoin – Arthur Hayes

Arthur Hayes, one of the industry’s well-known trading and crypto veteran who doubles as the Co-founder of the BitMEX exchange, has given his view on what he thinks will happen to Bitcoin if the majority of Central Bank Digital Currencies (CBDCs) is eventually launched.


According to a press release, Hayes has called the CBDC “pure evil.” His point of view is based on the notion that the CBDC will grant the government total influence over amending legislation relating to numerous subjects, like the use of Bitcoin. 

He claimed that CBDCs directly infringe upon the right of individuals to self-govern fair trades with one another. He went on to say that the CBDC will affect the banks by posing an existential threat to their capacity to conduct business.

He also stated that he believes the government will be able to quickly replace fiat currency with CBDC because of the indifference of the population, bringing in a nightmare of financial surveillance. However, he hinted that the domestic commercial banks can act oddly as an accomplice to prevent the government from putting the best CBDC architecture for suffocating the populace into place.

Hayes also underlined that the government is trying to use CBDC to fight economic inflation, but he claims that doing so could hurt the general population by hurting the blockchain industry. The inflation that will soon be felt, according to him, will be significantly different from what the economy has seen over the previous 50 years, so he merely hopes that employing CBDC will be successful.

The Dominance of CBDC as an Instrument of Trade

A CBDC is a type of legally recognized digital currency, also known as “digital cash”. It is fundamental money, just like real money, and liability of the central bank. 

So many countries have begun testing the use of CBDC by using it to make payments for goods and services. For example, the government of Canada has begun consultations on how to use the CBDC. Deputy Prime Minister Chrystia Freeland recently released a government statement with a focus on digital assets and currencies and their use worldwide.

Additionally, it has been reported that the Central Bank of the United Arab Emirates (CBUAE) wholesale CBDC Pilot Program is now complete.

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Embattled BitMEX Co-Founders to Pay $30M in Civil Fine

The United States District Court for the Southern District of New York (SDNY) has pronounced a combined Civil monetary fine of $30 million for the three embattled BitMEX exchange co-founders indicted for violating the US Bank Secrecy Act. 


The co-founders include Arthur Hayes who served as the Chief Executive Officer until the investigations started, Benjamin Peter Delo, and Samuel Reed.

As announced by Commissioner Johnson of the Commodity Futures Trading Commission (CFTC), the fine was pronounced in the form of a Consent Order, and each of these founders will be required to pay $10 million each. The CFTC picked up the enforcement actions against the trio for running the BitMEX Exchange in the United States without receiving the appropriate licenses.

Hayes and his colleagues were accused of failing to implement the relevant Anti-Money Laundering (AML) measures as well as Know Your Customer (KYC) procedures. 

Speaking with respect to the Consent Order, Commissioner Johnson said “the mission of the Commodity Futures Trading Commission is to promote the integrity, resilience, and vibrancy of the U.S. derivatives markets through sound regulation.” He noted that the commission has the powers of the US Congress to carry out its mission as the legislature “authorizes the CFTC to promote responsible innovation and fair competition in our markets.” 

He added;

“This case highlights the significance of cryptocurrency derivatives platforms operating in the United States, particularly those permitting U.S. customer participation; such platforms must comply with the Commodity Exchange Act and the Commission’s regulations. To remain competitive in global financial markets, our derivatives markets must continue to innovate, particularly in emerging digital asset markets. It is imperative, however, to balance responsible innovation with core principles, including consumer protection, transparency, and fairness.”

BitMEX got freed from the regulator back in August last year when it paid $100 million for related charges. While the CFTC is stern with respect to its enforcement actions, it also claims it is in support of a full innovative drive in the crypto ecosystem.

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Former BitMEX CEO Arthur Predicts $30K Price Target for BTC by June

In tandem with his call for a “crypto carnage” that is underway in the second quarter, former BitMEX Chief Executive Officer Arthur Hayes has predicted a price slump of $30,000 for Bitcoin (BTC) and $2,500 for Ethereum (ETH) by the end of June this year.


Backing the Bearish Narratives

Hayes is a veteran in the crypto investing game, and his prowess is well showcased in the BitMEX derivatives exchange which he co-founded. While tagging himself as a long-term crypto investor, Hayes believes the prices of BTC, ETH, and other cryptocurrencies have grown so much in the past weeks that a reversal is imminent.

According to Hayes, the strong correlation between Bitcoin and the Nasdaq 100- an index of top tech stocks in the U.S., is enough grounds for the impending reversal that may befall the leading coin. He shared a series of chats that showed the high correlation with these stocks, and he said that a reversal in trend from these stocks is bound to stir a corresponding drawdown in the price of Bitcoin and Ethereum.

With the effects of the coronavirus clearing across the board, Hayes also argued that the introduction of higher interest rates by the Feds bolsters the outlook of the Nasdaq 100 as a curb against inflation (which naturally favours crypto) will have a tremendous bearish impact on the digital assets.

The war in Ukraine also comes as a major bearish factor that will eventually hurt the price of stocks and, by extension, cryptocurrencies.

Proposed Solutions

While issuing a disclaimer that his commentary is not to be taken as an investment decision, Hayes said he is bullish in the long term, but buys cheaper cryptocurrencies alternatively with a good propensity for growth in the long term.

He also said he is buying put options in the short term, a move that will remain in his favour irrespective of the market trend.

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BitMEX Founder Arthur Hayes Pleads Guilty to Violating Bank Secrecy Act

BitMEX co-founders Arthur Hayes and Benjamin Delo have both pleaded guilty to violating the United States Bank Secrecy Act (BSA).


As announced in a press release by the Department of Justice, the plea detailed the duo’s failure to establish, implement and maintain Anti Money Laundering (AML) safeguards on the BitMEX trading platform and per the plea deal, both can be sentenced to a maximum jail term of 5 years.

“The opportunities and advantages of operating in the United States are legion, but they carry with them the obligation for those businesses to do their part to help in driving out crime and corruption,” said U.S. Attorney Damian Williams, “ Arthur Hayes and Benjamin Delo built a company designed to flout those obligations; they willfully failed to implement and maintain even basic anti-money laundering policies.  They allowed BitMEX to operate as a platform in the shadows of the financial markets.

BitMEX was one of the flagship derivatives trading platforms that ventured into the digital currency ecosystem, however, its early days were marked with controversies and crackdowns from market regulators, particularly those in the United States. While the Commodity Futures Trading Commission (CFTC) charged the exchange for illegal trading back in October 2020, BitMEX has never left the crosshairs of the SEC for its securities trading.

Per the current charges levied on the founders, Arthur Hayes agreed to surrender to the authorities back in March last year, a bold move that was soon followed by Delo and Samuel Reed who initially was seemingly on the run from authorities.

Following the current plea deal, Arthur Hayes and Benjamin Delo have each agreed to separately pay a $10 million criminal fine representing pecuniary gain derived from the offense. Their final sentencing is subject to the prerogative of the presiding U.S. District Judge John G. Koeltl.

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Bitcoin Won’t Bottom Until It Retests $28,500, Believes BitMEX Co-Founder Arthur Hayes

Arthur Hayes – co-founder of BitMEX – just gave an interesting Bitcoin price forecast in his bi-weekly analysis. Despite his expectations that the Federal Reserve won’t raise interest rates, he still doubts Bitcoin’s bottom will arrive until a $28,500 retest.

Calling the Fed’s Bluff

In BitMEX’s latest post from Crypto Trader Digest titled “Bottomless,” the former CEO extols cryptocurrencies as the “last free market on earth”. He explained that due to “wanton” money printing, large banks and governments are able to capture other asset prices at “politically expedient levels”.

Afterward, he recognizes that while cryptocurrencies are down significantly in recent weeks, the Federal Reserve hasn’t even raised rates yet. Therefore, he suspects that there could be more carnage to come in the markets when March’s expected rate-hike actually arrives.

However, he also expressed doubt as to whether the Fed actually has the ability to raise rates without blowing up the markets.

“If the Fed publicly stated it will contract the size of its balance sheet, then how can it maintain its pledge to backstop corporate issuers?” said Hayes. “The market has woken up to this inconsistency, and yields have begun a small breakout to the upside.”

Hayes predicts the Fed will opt to continue easy monetary policies out of political expediency, despite its claims to the contrary. As history has proven, news of rising inflation tends to be a positive for Bitcoin’s price.


Another FOMC meeting will take place later today, which markets await anxiously. Hayes suggests that investors not wait for the Fed to announce it has changed its mind, and to expect crypto to pick up “well in advance” of that.

Floor Below $29k?

Hayes sees Bitcoin’s next true resistance level at $28,500 – approximately where it bottomed in July of last year. Should this level be broken, he expects a liquidation cascade that could possibly take Bitcoin back down to $20k – its 2017 high.

“If either of Bitcoin’s 2017 and Ether’s 2018 previous ATH ($20,000 and $1,400 respectively) are breached on a daily candle, then I don’t even want to think about it,” he said.

Bitcoin is currently trading above $38k – a significant rebound from its low at $33k days ago.


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Judge scolds BitMEX lawsuit plaintiffs for offering him crypto ‘basics’ lessons

The California District Judge overseeing a racketeering suit filed against crypto derivatives exchange BitMEX, William H. Orrick, has rebuffed the plaintiffs’ motion offering to provide them with a tutorial on “cryptocurrency basics.”

According to a July 13 report from Law360, the judge responded to Bitcoin Manipulation Abatement LLC (BMA)’s proposal with a one-page order on Tuesday, outlining the offer was “not well taken.”

“Plaintiffs believe that cryptocurrency tutorial will benefit the court. I think not,” Judge Orrick wrote, adding that the plaintiffs should “focus on the task at hand — convincing me that they have stated a plausible claim.”

BMA’s complaint was first filed in May 2020, just weeks after the firm filed lawsuits against Ripple and FTX. The suit against BitMEX is now in its fourth iteration.

The plaintiffs allege that BitMEX’s former parent company, HDR Global Trading Limited, and executives Arthur Hayes, Ben Delo, and Samuel Reed deliberately designed the exchange to “engage in, facilitate, aid, abet, counsel, induce and/or procure a myriad of illegal activities.” BMA alleges BitMEX carried out racketeering, money laundering and wire fraud.

A previous version of the suit was dismissed without prejudice in March. BitMEX has staunchly rejected BMA’s claims.

The United States Department of Justice has accused Delo, Hayes, Reed and BitMEX head of business development Gregory Dwyer of violating the Bank Secrecy Act, having filed complaints against the group in October 2020.

Reed was arrested the same month, while Delo and Hayes voluntarily surrendered to authorities in March and April respectively, before being released on bail. The trio will face trial in March 2022, with Dwyer remaining at large.