Maelstrom, a mighty whirlwind – So be it! In a recent article entitled “Maelstrom”, the very sulphurous Arthur Hayes took stock of the crypto market and spoke about his vision for Bitcoin (BTC) and Ethereum (ETH) in 2022.
The beginning of the end for the crypto market?
Although thefuture inflation was no doubt for some, the Federal Reserve (Fed) first tried to reassure everyone, before being confronted with the reality of the figures. The US Central Bank must now react and announced, at the end of 2021, that it increase its key rates (from which derive the borrowing rates for economic players).
When rates are very low, debt/borrowing is very “cheap” for companies. This is particularly the case for all tech giants, the first beneficiaries of such a macro-economic environment (a lot of research and development is needed). This could perhaps help to better understand the curve of the S&P500, supported by the interventionist policies of the last two years.
“Those who listened to the fundamentals all underperformed. Stop fooling around, and buy the fuckin’ Dips ! »
Arthur Hayes
L’inflation no longer nothing transient, as Jerome Powell and other Fed dignitaries proclaimed last year. Now we have to roll up our sleeves. Especially since 2022 is a election year (mid-term) in the United States. Inflation will be a major topic this year and will inevitably have an impact on policies taken to curb it.
According to Arthur Hayes, these rate hikes would very harmful for the crypto environment, in the sense that it would directly impact financial flows. And cryptos could pay the price of a de-risking partial or total of the big players.
even though diamond hands (the convinced investors who do not sell) are more and more numerous, he fears that they do not have enough ” gunpowder “ to blow up the old top of Bitcoin in an unfavorable environment. Hayes sees there the ingredients for a “rinse” in good standing.
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Engines called Bitcoin and Ethereum
Despite growing innovation and a year 2021 placed under the sign of ethereum killers, crypto menu prime coins remain Bitcoin and Ethereum.
- Bitcoin is the cryptographic representation of money, energy “necessary to create value” (proof of work).
- Ethereum is the decentralized computer of the internet (programmable currencies, smart contracts, etc.).
Although Ethereum’s competitors have performed (even outperformed for some) in the past year in a bullish environment, it’s a safe bet that the first and second layer solutions are underperforming in a bearish climate. By virtue of their quality of stallions, one should encrypt one’s own tokens in value relative to BTC or ETH. A scale to keep in mind if the market corrects sharply.
“If I believe Bitcoin can trade under $30,000 and Ethereum under $2,000, I will unload all my shitcoins. Simply, because Bitcoin and Ethereum are the most valuable tokens and they will depreciate less quickly than their so-called competitors. These shitcoins can lose 75-90% of their value in a true risk-free environment. »
Arthur Hayes
Light at the end of the tunnel for cryptos?
Finally, Hayes details 3 scenarios that could, in his opinion, cancel a rise that he considers inevitable:
- If the CPI (consumer price index) is below 2% (7% inflation for December 2021);
- If certain mechanisms of the money market and the US Treasury give way in the face of too abrupt a rise in rates, this would mean relaunching the printing press again;
- If inflation is no longer the number one cause of concern among American voters (elections in November).
After a year 2021 breaking all records, the crypto market could go down and gradually leave the euphoria. The macroeconomic environment suggests that Bitcoin and Ethereum could bear the brunt of US monetary policy. We can reassure ourselves by recalling that the market often tends to pricer events before they happen.
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