Bitcoin at rock bottom as everyone who could go broke has gone bankrupt

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Arthur Hayes, the former CEO of crypto derivatives platform BitMEX, thinks the worst may be over for Bitcoin (BTC) this cycle, as the biggest, most irresponsible entities no longer have BTC to sell. .

Looking ahead, almost everyone who could go bankrupt has gone bankrupt, he said in the Dec. 11 interview with crypto attorney and podcaster Scott Melker.

Hayes clarifies his position by explaining that when Centralized Lending Companies (CELs) have financial problems, they often call loans first and then sell BTC first because it functions as the reserve asset of the crypto and the most pristine and liquid asset:

When you look at the balance sheet of one of these heroes there is no bitcoin on it because what are they doing they sold the bitcoin when they went bankrupt they sold the Bitcoin during the wave before going bankrupt.

Hayes made a similar point in a December 10 blog post, explaining that while this credit crunch is ongoing, large physical BTC selloffs are taking place on both CELs’ exchanges trying to avoid bankruptcy and commercial companies whose loans have been recalled and must liquidate their positions.

Let’s try again.

In “PEMDAS” I argue that $BTC has bottomed out, then talk about what kind of #crypto I’m going to hold while waiting for the money printer to go back to brrr.https://t.co/JNAQ7VK0Ec pic.twitter .com/IV4Td1UTda

Arthur Hayes (@CryptoHayes) December 9, 2022

This is why the price of Bitcoin fades before the CELs go bankrupt. This is the big step, he says:

I can’t demonstratively prove that all of the Bitcoins held by these failing institutions were sold off during the multiple crashes, but it appears they did their best to liquidate the most liquid crypto collateral possible just before they went under.

Hayes thinks the large-scale liquidations are over, however, explaining in the blog post that there’s no reason for you to hang on if you’re in dire need of fiat.

Related: Hong Kong Could Be Key to China’s Crypto Comeback Arthur Hayes

Following the collapse of crypto exchange FTX and the resulting fallout, the market is still grappling with the crypto winter, but Hayes thinks the market could experience some recovery in 2023.

I think the US Treasury market will become dysfunctional at some point in 2023 due to Fed tightening monetary policies, he said, adding: At this point, I expect the Fed to activate the print bank then explode shaka-laka bitcoin and all other risky assets will soar.

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