Billionaire Arthur Hayes analyzes the state of the crypto markets and says several major players have run out of bitcoins to sell
BitMEX founder Arthur Hayes is exploring the possibility that Bitcoin may already have hit a bear market bottom, saying three key players likely have no more BTC to sell.
In a new blog post, the crypto veteran identifies three investor groups that have had to part with their Bitcoin treasures this year due to leverage abuse: centralized lending and trading firms, Bitcoin miners, and ordinary speculators.
Looking at centralized companies, Hayes says these institutions likely dumped most of their BTC following the collapse of crypto hedge fund Three Arrows Capital (3AC) and Sam Bankman-Fried’s trading firm Alameda Research.
“If these two companies [Alameda and 3AC] got in trouble, what did we see? We saw large transfers of the most liquid cryptos – Bitcoin (WBTC in DeFi) and Ether (WETH in DeFi) – to centralized and decentralized exchanges, which were then sold. This happened during the great descent…
I cannot demonstratively prove that all of the Bitcoins held by these failed institutions were sold during the multiple crashes, but it looks like they tried their best to liquidate the most liquid crypto assets they could just before they went under .
That [centralized lending firms] and all major trading companies have already sold most of their bitcoin. All that’s left now are illiquid sh**coins, private equity in crypto companies, and locked pre-sale tokens.”
As for bitcoin miners, Hayes says they have been net selling their BTC since the first credit crunch in June, when the crypto king fell below $20,000 for the first time in over 18 months.
“They need to do this to stay on top of their large fiat debt burdens. And if they don’t have debt, they still have to pay utility bills — and since Bitcoin’s price is so low, they have to sell even more of it to keep the facility running.”
Source: Arthur Hayes / glassnode
When it comes to common speculators, Hayes says he looks at open interest (OI) levels in both long and short contracts to gauge the level of speculation in the markets. According to him, OI’s all-time high coincided with BTC’s all-time high. The OI also plummeted as the market fell, suggesting speculators were being wiped out.
“If we look at the OI sum of all major centralized crypto derivatives exchanges, we can see that the local OI low also coincided with Bitcoin’s sub-$16,000 stab on Monday, November 14th. Now the OI is back at levels not seen since early 2021.
The timing and extent of the reduction in OI leads me to believe that most of the overly leveraged long positions have been cleared.”
Source: Arthur Hayes / glassnode
Finally, Hayes says he’s not 100% sure if Bitcoin’s current bear market bottom around $15,900 is the all-time bottom, but he says BTC bounced off this level because “the forced sale caused by a credit contraction has stopped.” He also states that everything is cyclical.
“What goes down will go up again.”
At the time of writing, Bitcoin is changing hands at $17,170.
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