BitMEX co-founder, Arthur Hayes, recently provided insights into potential catalysts for a market recovery, highlighting significant bullish signals for both the cryptocurrency and stock markets. Hayes attributed the recent shifts in sentiment in the cryptocurrency market to macroeconomic factors, specifically noting a substantial $200 billion increase in the US Treasury General Account (TGA) from taxpayer inflows as a potential driving force for market revitalization.
Discussing possible triggers for a market rally, Hayes shared his observations from his personal X account and outlined three options that US Treasury Secretary, Janet Yellen, could consider as the announcement for the second quarter repayments of 2024 approaches. Given that the TGA now stands at $941 billion after tax payments, Yellen’s decision could have a significant impact on both traditional stock markets and the cryptocurrency market.
Hayes summarized three potential scenarios that could trigger a rally in both markets:
1. Halt of Treasury issuances: The government could inject $1 trillion of liquidity into the market by reducing the TGA to zero.
2. Shifting borrowing to Treasury bonds: This option involves reallocating borrowing to Treasury bonds, effectively removing money from the Reverse Repo Program (RRP) and injecting $400 billion of liquidity.
3. Combination of options 1 and 2: The government could simultaneously implement both strategies, injecting a total of $1.4 trillion liquidity into the market. This would involve halting long-term bond issuances, focusing instead on bond issuances, and gradually reducing the TGA and RRP.
According to Hayes, any of these options could serve as a trigger for a rally in both the stock and cryptocurrency markets, potentially propelling a bull market in cryptocurrencies. He anticipates that the expected liquidity injection will have a positive impact on risky assets and help counterbalance the recent outflow of liquidity from individuals to the government.
Despite facing headwinds such as the Personal Consumption Expenditures (PCE) inflation data, the cryptocurrency market, including Bitcoin, is showing signs of strength. Bitcoin has experienced a 1% increase in the past 24 hours and is currently trading at $64,402. Over the past 7 days, Bitcoin has decreased by 0.81%, and over the past 30 days, it has declined by 8.97%.
Disclaimer: The information provided in this article does not constitute investment advice. Investors should be aware of the high volatility and associated risks of cryptocurrencies and conduct their own research.
