“Looking ahead, pretty much everyone who might go bankrupt is bankrupt,” he said in a Dec. 11 interview with cryptocurrency advocate and broadcaster Scott Melker.
Hayes makes his position clear by explaining that when central lending firms (CELs) encounter financial problems, they often seek loans first, and then sell BTC first because it acts as “the reserve asset for cryptocurrency” and “the most authentic and most liquid asset:”
“When you look at the balance sheet of any of these champions, there’s no bitcoin on it because what they’re doing, they sold bitcoin because they were going bankrupt, they sold bitcoin during the wave before they went bankrupt.”
Hayes made a similar argument in a December 10 blog post, explaining that while “this credit crunch is going on,” significant physical sales of BTC are occurring on exchanges from both CELs in an effort to avoid bankruptcies and trading firms that have been pulled out. Their loans and must liquidate their positions.
“This is why the price of bitcoin was fluctuating before the CELs went bankrupt. This is the big move,” he said.
“I can’t prove that all of the bitcoins held by these failed institutions were sold during multiple crashes, but it appears they went out of their way to liquidate the most liquid cryptocurrency they could use right before they crashed.”
Hayes believes the large-scale liquidations are coming to an end, however, explaining in the blog post that “there’s no reason why you can’t continue if you have an urgent need for an order.”
Related: Hong Kong Could Be Key to China’s Cryptocurrency Return – Arthur Hayes
After the crash of cryptocurrency exchange FTX and its aftermath, the market is still deep in the grip of crypto winter, but Hayes believes that the market may see some recovery in 2023.
“I think the US Treasury market will become inefficient sometime in 2023 due to the tightening monetary policies of the Federal Reserve,” he said, adding, “At this point, I would expect the Fed to run the printer bank, and then boom-laka-it will go up.” Bitcoin and all other risky assets.