Crypto exchange BitMex co-founder, Arthur Hayes, says Bitcoin and Ethereum may have reached a bottom in their recent losses.
Hayes said in a blog post that Bitcoin’s bottom range is between $25,000 and $27,000. While Ethereum will find support between $1,700 and $1,800.
But, as Hayes pointed out, neither token is ready to make a significant comeback just yet. Pressure from the Federal Reserve’s rates increase and rising inflation are expected to placate market sentiment.
The Bitmex founder laid out a scenario in which Bitcoin and Ethereum may launch a recovery. However, such a scenario will take some time to play out.
There is a need to dump Short term Investors before market recovery
According to Hayes, one of the main factors impacting Bitcoin and Ethereum is that most short-term investors are trading at losses. Such traders will sell to reduce losses rather than hold until profitability.
As such, any market recovery could be quickly hampered by sellers dumping their positions to regain some value.
This choppy price action will eviscerate the capital of short-term traders who half-heartedly believe this is the bottom. These folks want
This choppy price action will eviscerate the capital of short-term traders who half-heartedly believe this is the bottom. These folks want to catch the knife and exit for a quick profit.
Hayes said Terra’s recent sale of 80,000 Bitcoin to back its stablecoin had already eased a lot of selling pressure off the token. Which he predicted would be the bottom.
Additionally, Hayes said that a recent divergence between crypto and stock markets also signaled that a bottom may be in sight.
When will Bitcoin and Ethereum start to recover?
Hayes said that the market will recover only if short-term traders have been relieved of their capital.
He advised traders to remain patient with the market. He claims that “diamond-handed monkeys” can only return to active trading after short-term traders have left. Though he did not provide a specific timeframe
Hayes also maintained his earlier prediction that Ethereum will surpass $10,000 by the year’s end. Nonetheless, as the Federal Reserve tightens monetary policy, he predicts far more market volatility in the interim.