Arthur Hayes, noted crypto-currency entrepreneur and former BitMex executive, has returned to the spotlight with a new trading strategy on financial markets, the U.S. Federal Reserve’s monetary policy and, of course, crypto-currencies. Hayes’ new piece is titled Bouncy Castle.
The essay comes at a rather interesting time in the crypto-currency market, with Bitcoin (BTC) up more than 25% since the beginning of the month, after showing unusually listless movement and corresponding volatility in the previous months. In this new essay, the author identifies three possible scenarios that should help him win no matter how things turn out.
Arthur Hayes’ Trading Strategies
The first scenario is that bitcoin’s current bullish behavior is a natural bounce from lows and that BTC climbs slowly until U.S. dollar liquidity conditions are sufficient to create powerful momentum. In this case, Hayes’ plan would be to wait for confirmation of measures that could improve liquidity conditions, i.e., a pivot in U.S. monetary policy, and enter Bitcoin even if it doubles in time, say to $40,000. The logic is that a pivot would mean a rise to $69,000 and beyond.
The other two scenarios stem from the general thesis that the current growth of the crypto-currency market is the result of anticipating the onset of money printing.
The assumption is that either the Fed doesn’t believe the good macro reports and doesn’t roll over, causing bitcoin to crash to previous lows. Or the Fed pivots, starts printing money again and launches the bull market at full capacity. There is little difference between these two scenarios, Hayes says, as the market will gain in both cases, as they both involve the start of monetary policy easing.
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