How Realistic is Arthur Hayes' $3,000 Bitcoin Price Target?
BitMEX CEO Arthur Hayes stole the spotlight after arguing that Bitcoin could drop to $3,000. While this target is realistic, multiple indexes reveal that a lot has to happen before it becomes true.
Key Takeaways
- Arthur Hayes believes that the global financial markets are poised for a further downturn that could have a drastic impact on Bitcoin.
- Tone Vays, a former Wall Street trader, argues that the current economic environment is perfect for the pioneer cryptocurrency to thrive as a hedging asset.
- Different technical patterns show an ambiguous outlook, making the current price levels pivotal for BTC's trend.
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BitMEX honcho Arthur Hayes thinks $3,000 Bitcoin is realistic given current economic conditions. Tone Vayes, meanwhile, thinks BTC will show its colors as a safe haven. Who’s right?
Signs of a Further Decline
In a recent blog post, Arthur Hayes, CEO at BitMEX, explained that the global financial markets are poised for a further downturn. The former institutional trader maintains that the $2 trillion stimulus package the U.S. Senate passed to provide relief from the havoc caused by the ongoing pandemic may have little to no impact in the stock market.
Although the S&P 500 is up nearly 30% from the recent crash, Hayes believes this bullish impulse represents a dead cat bounce. He now expects a steeper decline across all major economies, bleeding over into the crypto markets.
“As the SPX rolls over and tests 2,000 expect all asset classes to puke again. As violent as the Q1 collapse in asset values was, we have almost 100 years of imbalances to unwind the ancien régime,” said Hayes.
The former Deutsche Bank market-maker affirmed that Bitcoin could retest the $3,000 price level before it is forced to rebound sharply and end the year at around $20,000.
Given the current state of commotion around the planet, the chances of the pessimistic outlook materializing are not small. As the unemployment rate rises and investors rush to safe haven assets, the financial turmoil may intensify creating the perfect conditions for a deep recession, which would spill over into crypto.
Nevertheless, Tone Vays, a former Wall Street trader and VP at JP Morgan Chase, argues that an economic crisis would likely be beneficial for Bitcoin since it could thrive as a hedging asset. This type of environment is what makes the flagship cryptocurrency so resilient, according to the analyst.
While the Crypto Fear and Greed Index continues sensing “extreme fear” among market participants, Vays said to be more bullish than ever. Who is right?
Bitcoin’s Pivotal Point
Based on its 1-day chart, Bitcoin broke out of an ascending triangle that was developing since the Mar. 12 crash. This technical formation is considered to be a continuation pattern that forecasts a 32% target to the upside upon the breakout point.
After moving above the horizontal trendline of an ascending triangle, most assets tend to return to the breakout point before continuing to trend. Currently, the pioneer cryptocurrency appears to be behaving this way.
A further increase in demand for Bitcoin around the current price levels could push it up to $9,000 or higher. This target is determined by measuring the height of the triangle at its thickest point and adding that distance to the breakout point.
Nonetheless, if the current level of support provided by the 78.6% Fib fails to hold, the bellwether cryptocurrency could drop to the next demand barrier around $6,100. This price hurdle would then be key to BTC’s trend.
Breaking below it will add credence to Hayes’ outlook, while bouncing off from it will give hope to investors.
Only time will tell whether Bitcoin will be able to thrive as a safe haven asset during the ongoing financial meltdown or plummet with the rest of the markets.
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