Former BitMEX CEO Arthur Hayes Spread Another prediction for Bitcoin and Ethereum. Meanwhile, the top cryptocurrencies by market capitalization continue to move in a narrow range with increased volatility in the US Consumer Price Index (CPI) today across the board.
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At the time of writing, Bitcoin is trading at $40,500 with a loss of 1% in the last 24 hours and a loss of 13% in the past week. Ethereum is trading at $3,000 with similar performance during this period.
As NewsBTC reported, Hayes believes the current Petrodollar-backed financial system is dead. This opened the door to a new system where standalone currencies, such as Bitcoin and Ethereum, will see more demand.
Ethereum will benefit the most in the short term as it will move to the Proof of Stake (PoS) consensus algorithm. Thus, it will experience a 99% reduction in its power consumption with the staking system that will give rewards to network validators.
Hayes argued that institutions would protect against inflation by using this system. However, major cryptocurrencies will be subject to an increase in selling pressure in the short to medium term as the US Federal Reserve attempts to tame inflation.
This will lead to a bloody financial market coming up in May when the Fed begins its tightening program. At the time, the former BitMEX CEO claimed that Bitcoin and Ethereum show high levels of correlation with traditional markets, specifically the Nasdaq 100 Index (NDX).
In other words, cryptocurrency is being traded as a big technology company. Hayes believes that this correlation should turn to the downside before Bitcoin and Ethereum start climbing to new all-time highs.
Before that happens, the NDX and the traditional market will be pushed into the red with a 30%-50% pullback potential. It may take BTC and ETH to retest their critical support areas around $30,000 and $2,000 respectively.
Evidence of the Ethereum and Bitcoin massacre
As evidence of this upcoming bloodbath, Hayes claims that the NDX on the 1-year chart shows potential weakness. The index failed to break above the 61.8% Fibonacci retracement level with the extension of the downtrend, and this indicates more losses. Hayes said:
The chart tells me that NDX will continue lower, test its local bottom, and break below it for sure. I think the next stop after that is to test 10,000 (…). Crypto capital markets are the only free markets left in the world. As such, they will drive stocks lower as we approach deflation, and drive stocks higher as we work our way out of it. Bitcoin and Ether will decline before the Fed acts and changes its policy from strict to loose.
In the long term, Bitcoin will reach $1 million per coin and Ethereum over $10,000, Hayes previously stated. Much depends on the Federal Reserve seemingly stuck in its current state, and in the conflict between Ukraine and Russia and its resolution.