Arthur Hayes predicts Bitcoin will correct 20%-30% in early March

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BitMEX founder Arthur Hayes recently outlined his market sentiment and investment strategy for the coming months in a report postal on the blog on January 5th.

In a candid and direct manner, Hayes revealed the makeup of his cryptocurrency portfolio and detailed his trading strategy, focusing on Bitcoin’s expected pullback.

Hayes revealed that a large portion of his portfolio is allocated to Bitcoin and Ethereum, accounting for approximately 70%. However, he called his other investments “junkcoins,” stressing that the derivatives associated with them were less liquid. This lack of liquidity has led Hayes to assert that in order to hedge against liquidity macro risks, he must rely on Bitcoin derivatives, using options on a specific trading setup that he expects to resolve within two weeks.

Additionally, Hayes predicts a healthy 20% to 30% correction in Bitcoin prices by early March. He pointed to the potential impact of the recent approval of a spot Bitcoin ETF in the United States, speculating that their predictions could push Bitcoin prices higher, possibly hitting all-time highs near $60,000 or close to $70,000 in 2021. This increase, if combined with the withdrawal of USD liquidity, could trigger a more serious correction of 30% to 40%, causing Hayes to abandon the decision to buy Bitcoin before the critical date in March this year.

Hayes detailed his trading plan, planning to exercise sizable puts in late February, favoring puts expiring on June 28 rather than March 29 to minimize the decline in negative Theta, a measure of Inevitable loss of option value) over time experience). He plans to seek significant leverage for these puts by selecting a strike price of 20% to 25% based on the current quarter’s June futures contract price.

Hayes emphasized the importance of exit timing, emphasizing the path dependence of option payouts and the risk of losing money if the position is not closed promptly despite accurate market forecasts. He plans to close his short positions between March 12 and 20, hoping to profit from an expected market correction.

Beyond this potential correction, Hayes said at the end of March that the cryptocurrency market would continue to be bullish, predicting a recovery in cryptocurrencies in anticipation of Bitcoin’s halving and settlement. Market turmoil caused by regulatory actions.