A potential liquidity injection in the world’s largest economy could initiate Bitcoin’s rally next week.
The Bitcoin short position of Arthur Hayes has been closed as a result of his initial apprehensions regarding a significant correction over the weekend.
Hayes, the former CEO of the BitMEX cryptocurrency exchange, issued a warning on Sept. 6 that Bitcoin could correct below the $50,000 psychological mark this weekend. He initiated a short position in order to profit from the decline.
In an X post on September 8, Hayes, anticipating a potential Bitcoin rally as soon as next week, disclosed the termination of his short Bitcoin position, thereby alleviating investor concerns.
“I closed my $BTC short position and earned a 3% profit, which was sufficient to cover my food and bar expenses at KBW. If the market continues to perform poorly next week, $BTC MIGHT rise in anticipation of additional liquidity. This is due to the fact that Bad Gurl Yellen is monitoring markets and is expected to release a statement weekend.”
According to Hayes, the price of Bitcoin may experience a surge as early as next week, as a result of the Federal Reserve’s increased liquidity in the United States dollar. The present economic and financial market weakness may serve as a catalyst for this reaction.
The anticipated increase in liquidity infusions from the world’s largest economy could have a substantial impact on the sentiment of crypto investors and the price of Bitcoin.
Hayes wrote in a Sept. 7 X post that there is a possibility that the Federal Reserve could inject liquidity into traditional markets if there is additional downside action.
“Bad Gurl Yellen is monitoring the markets; if they continue to decline, she will undoubtedly increase the liquidity by printing additional money.”
Jamie Coutts, principal crypto analyst at Real Vision, stated in a May 16 X post that the M2 money supply, which approximates all currency and short-term bank deposits in the United States, could be the determining factor in the next Bitcoin rally.
“This is a result of a strong correlation with $BTC bull cycles. Global M2 appears to encompass the majority of the movements among the three major indices that I monitor in my Bitcoin/Liquidity framework.”
Nevertheless, the nominal value is less significant than the rate of change in the money supply, as “Bitcoin typically fluctuates in accordance with changes in M2 momentum,” stated Coutts.
The M2 money supply experienced its first positive year-over-year change since November 2023 at the beginning of May, suggesting that investors may soon begin seeking inflation hedges, such as Bitcoin.
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