Following the current bullish momentum of the world’s leading crypto asset, industry experts are beginning to express their opinions on its future price movement, given the possible influence of the Federal Reserve. Meanwhile, an American entrepreneur and former BitMex CEO, Arthur Hayes, says that a further change of the monetary policy by the Fed would impact the crypto market and thus derail the recent gains.
A Likely Bitcoin Price Drop
2023 for the digital asset industry begins on a high, with most cryptocurrencies seeing green for the first time in weeks. Bitcoin was not left out of the market uptrend, as the price of the leading crypto assets surpassed $23,000 after slumping below $16,000 toward the end of last year.
Furthermore, analysts attribute the recent BTC price rally to the decline in the US consumer price index (CPI), which hints at a possible slowdown in interest rate hikes. However, Hayes warned about a likely drop in price for Bitcoin and the broader crypto market.
The experienced financial analyst stated that this might happen if the United States Federal Reserve maintains its existing monetary policies. Hayes stressed that the new US macroeconomic policy is a recipe for disaster for the global financial system and could sink Bitcoin and the digital asset market.
According to him, there is no need to be excited about the current BTC price surge, and the uptrend should not be seen as the beginning of another bull trend. Moreover, it is reported that the recent data from the US Bureau of Labor Statistics shows the inflation rate peaked at close to 10% mid-last year and is currently moving toward the expected level (2%).
Is BTC Connected To USD Liquidity?
Debates over whether the crypto market and Bitcoin operate independently of central banks are ongoing. But a careful look at the status of the USD as the world reserve currency and BTC’s price shows that the latter is highly dependent on the course of the USD’s liquidity.
Furthermore, the recent market actions show investors are confident of a softer stance in the Fed’s monetary policy. On the other hand, some analysts expect the Federal Reserve to move on with its policy adjustment and that BTC’s recent rally may continue with the emergence of a “secular bull market.”
In a recent post on his blog, Hayes stated that if the Fed failed to follow through with its expected pivot despite the impressive CPI, the BTC price would likely crash to its previous low (around the $15K range).
Hayes believes the current gains are part of BTC’s rebound from the previous lows and warns investors not to expect a new peak.
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