Arthur Hayes: Bitcoin volatility will continue, weakness is temporary.

An important development for cryptocurrency investors is the recent comments from former BitMEX CEO Arthur Hayes. Hayes noted that the current weakness in Bitcoin (BTC) prices is influenced by the U.S. government's shutdown process as well as dollar liquidity constraints. This situation, which has caused increasing concern among investors, points to the likelihood of sharp fluctuations in the cryptocurrency markets.

Hayes emphasizes that the U.S. Treasury continues to borrow to draw funds, but that this money is not flowing into the markets. He recalls that the U.S. Treasury Account (TGA) is about $150 billion above the target of $850 billion, highlighting that this extra held money will not enter the markets until the government reopens.

Hayes argues that due to the government's high borrowing rate, the Federal Reserve (Fed) will be forced to start printing money again. He states that this process will develop as stealth monetary easing, predicting that the Fed will provide unlimited liquidity to the repo market without directly purchasing bonds, effectively increasing the amount of dollars in circulation. Hayes remarked, "If Standing Repo Facility (SRF) balances are above zero, it means the Fed is effectively printing money."

Hayes expresses a short-term expectation of a volatile and weak market due to the government shutdown and cash constraints in the repo markets. However, he emphasizes that this situation is temporary, noting that Bitcoin is nearing the four-year anniversary of its 2021 peak. He pointed out that if many investors act hastily and sell during this period, they will incur losses.

Hayes predicts that if dollar liquidity in the markets begins to expand again, Bitcoin and altcoins will enter into a strong rally. Finally, Hayes advises investors to be patient, stating, "This period is an opportunity for patient investors. The market language may seem complex, but the essence is simple: either money is printed or it is destroyed. Whenever the printing starts, Bitcoin will begin to dance again," offering hope to investors.