Ramazan Eles 
The cryptocurrency market could face a period of selling pressure as Bitcoin approaches its fourth mining reward halving in April 2024. This warning comes from Arthur Hayes, co-founder of BitMEX and Chief Investment Officer at Maelstrom.
Hayes argues that despite the common belief of a post-halving price surge, a correction is more likely. He points out that the “bullish halving narrative” is widely accepted, potentially setting the stage for a price drop of at least 10%.
Historically, Bitcoin has seen significant price increases in the months following a halving. This event cuts the supply of new bitcoins issued per block in half every four years. The upcoming halving will reduce the reward from 6.25 BTC to 3.125 BTC.
Hayes believes that the market may be overestimating the halving’s impact. With Bitcoin already up over 65% this year, a correction could follow the event, despite new supply limitations.
Adding to the potential for a downturn, U.S. tax season and the Federal Reserve’s quantitative tightening (QT) policies could further limit dollar liquidity. This could lead to increased risk aversion and a sell-off of crypto assets around the halving date.
Tax payments typically reduce liquidity as individuals withdraw funds to meet their obligations. A stronger dollar due to reduced liquidity could make borrowing more expensive and discourage investment in risky assets like cryptocurrencies.
Hayes expects significant liquidity outflows due to capital gains taxes from the booming stock market and higher interest rates. This could lead to a sharp rise in the Treasury General Account (TGA) balance by mid-April.
The TGA is the government’s operating account, and its growth signifies a decrease in dollar liquidity. Hayes predicts a “precarious period” for risky assets between April 15th and May 1st.
However, Hayes suggests a potential market turnaround after May 1st. He anticipates Treasury Secretary Janet Yellen utilizing the TGA funds to stimulate asset prices in the lead-up to the U.S. presidential election in November.
In conclusion, Hayes advises traders to be cautious around the halving and suggests April as a potential time for short positions. He expects a return to “asset inflation” supported by the Fed and Treasury after May 1st.
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