Arthur Hayes, a highly respected player in the crypto industry and former leader of the crypto exchange, BitMEX, has issued a warning that all crypto assets except Bitcoin and Ethereum could suffer grave losses.
Hayes said in his report that if Bitcoin and Ethereum fall below $30K and $2K respectively in the months to come, he’d consider selling all of his other crypto assets, as their losses could be staggering.
“I will dump all of my shitcoins if Bitcoin is projected to fall below $30K and Ether below $2,000 over the next three to six months. Bitcoin and Ether are among the best coins available today, which means they will decline less than the rest of their yet-to-be-proven competitors.”
“Gravity will also be greater than 9.8m/s for any particular applications using the Bitcoin or Ether blockchain. If there was no crypto risk, these altcoins could go down 75% to 90%,” Hayes said.
In addition, Hayes says he may begin to take a second look at the value of Bitcoin and Ethereum if they correct below their previous bull market highs.
He said, “In the event Bitcoin drops below $20K or Ether drops below $1,400, I’ll wonder whether these cryptos can survive in terms of energy costs.”
“It was at those two levels that the bull market of 2017 reached its previous all-time highs. The fiat price is what matters, if oil drops again who cares? If the benchmark cryptos fetch fewer units of fiat as a result?.”
In the midst of writing this report, the flagship cryptocurrency is trading at $42K on FTX exchange, down 21% from its 30-day high of $50.8K while Ether was trading at $3,134, down 35% from its 30-day peak of $4.1K
In addition, Bitcoin might suffer downward pressures if the U.S. inflation data is higher than forecast on Wednesday.
Consumer prices are expected to rise 7.1% for the year through December and 0.4% month-over-month, according to the widely followed consumer price index (CPI). As a result of this surge, officials at the U.S. Federal Reserve are pushing for a faster normalization of monetary policy than initially anticipated.
Crypto assets are at the riskiest end of the risk curve, and since they benefited from the Fed’s “extraordinarily lax monetary policy”, it would be logical to expect them to suffer when an “unexpectedly tighter” policy shifts money into safer assets.
However, Bloomberg Intelligence’s senior commodity strategist Mike McGlone said $4OK was an important support level in the Bitcoin market. Further, he thought that as the world becomes digital and BTC is treated as collateral, the pioneer crypto would eventually emerge from its bearish phase.