The cryptocurrency world is eagerly awaiting the halving expected to take place on 19-20 April in Bitcoin and its effects on the market, while an interesting comment on the topic came from Arthur Hayes. Hayes stated that he expects a decline in the cryptocurrency markets before and after the halving.

“It will add propellant to a raging firesale of crypto assets”

Hayes, who harshly criticised the Fed and the US Treasury Department in his personal blog post yesterday, said, “Given that the halving occurs at a time when dollar liquidity is tighter than usual, it will add propellant to a raging firesale of crypto assets.” he said. Stating that he thinks such a sale will have an effect for a few weeks, Hayes wrote that he expects an increase in the following periods:

“The Bitcoin block reward is forecast to halve on April 20th. This is seen as a bullish catalyst for crypto markets. I agree that it will pump prices in the medium term; however, the price action directly before and after could be negative. The narrative of the halving being positive for crypto prices is well entrenched. When most market participants agree on a certain outcome, the opposite usually occurs.” he said. “That is why I believe Bitcoin and crypto prices in general will slump around the halving.”

“Rise starts after May”

Hayes also highlighted that risky assets will be susceptible in the second half of April because of factors such the Federal Reserve’s Quantitative Tightening, a decrease in liquidity caused by U.S. tax payments, and the untapped potential of the Treasury’s General Account. Hayes predicts that after the Federal Reserve’s meeting on May 1, the rate at which the money supply is tightening will slow down. He also thinks that the Treasury’s General Account will pump around $1 trillion in liquidity into the system, which would likely stimulate the markets.