Bitcoin 80K may have already bottomed! Arthur Hayes: Fed policy shift is expected to replenish the market.

Bitcoin fell to about 80K last Monday, triggering panic in the market. In response, Arthur Hayes stated that the bottom of this pullback should be around 80K, emphasizing that the Federal Reserve's (Fed) is about to end quantitative tightening (QT), which is expected to boost US dollar liquidity, providing strong support for Bitcoin and the crypto market. He also mentioned that the market will continue to be affected by fluctuations in US interest rate decisions, with short-term trends possibly experiencing volatility, but the overall direction is favorable for longer.

Hayes believes that the pullback has come to an end, and 80K is the key support.

Bitcoin has recently fallen significantly by over 35% from its historical high, dipping to nearly 80K last week. Arthur Hayes believes that Bitcoin has formed the bottom of this round of retracement near the 80K level last week.

He stated that Bitcoin should be able to hold the 80K mark, and even if it retraces later, it might only dip around the 80K price level. Hayes maintained a bullish outlook throughout the entire correction period and repeatedly reminded:

“As long as liquidity comes back, Bitcoin and altcoins will naturally rebound.”

Liquidity is expected to improve, and the Fed is expected to end QT next week.

Hayes judges that the main reason for Bitcoin hitting bottom comes from the overall funding environment in the United States is shifting. He pointed out that the Fed's balance sheet is expected to stop shrinking next week (12/1), which means the current cycle of quantitative tightening is about to end. He described this as a slight improvement in dollar Liquidity, and added that bank lending volume significantly increased in November, indicating that market funds are beginning to loosen.

Hayes believes that when liquidity returns, cryptocurrencies typically benefit first, and the classic trend known as “liquidity return driving rebound” in the crypto market may play out again. He even admitted that to see a larger scale of monetary easing, AI tech stocks must first fall, which will then drive funds to truly flow into the overall market.

The market's expectations for Fed interest rate cuts have undergone a major reshuffle, and the government shutdown has caused an information gap.

In addition to the Bitcoin market, the recent financial market has also been caught in severe fluctuations in policy expectations due to the U.S. government shutdown. As official economic data is interrupted, the market cannot accurately grasp the Federal Reserve's next move, making the possibility of an interest rate cut in December highly uncertain.

According to the CME FedWatch tool, as of this Monday, the market bets on the probability of a 25 basis point rate cut by the Fed in December have surged sharply from 42% a week ago to about 79%, showing significant fluctuation. This drastic shift in expectations also reflects the market's lack of sufficient information, relying solely on emotions and speculation to quickly adjust expectations.

Experts criticize the disordered expectations of policies, with fluctuations being extremely unusual.

This series of drastic changes has caught the attention of the economics community. According to Mohamed A. El-Erian, Chief Economic Advisor of Allianz Group, the market's significant turbulence regarding Fed policy is quite astonishing, completely contradicting the predictability and stability that the Fed has always pursued.

He pointed out that this disorderly expectation fluctuation arises from multiple overlapping factors, including significant data loss due to government shutdowns, the Fed facing pressure from dual policy objectives, the current chairman being in a transitional period, and the Fed's long-standing overreliance on short-term data and lack of a clear long-term strategy. He believes that this is the key reason for the current confusion in policy signals and the frequent fluctuations in the financial market.

This article Bitcoin 80K may have bottomed out! Arthur Hayes: The Fed's policy shift is expected to replenish the market, first appeared in Chain News ABMedia.