Arthur Hayes warned about a potential decline to $70,000 for Bitcoin as large-scale ETF outflows could accelerate the downtrend.
By Parth Dubey
Edited by Julia Sakovich
Updated
3 mins read
The cryptocurrency market has been experiencing significant volatility, with market leader Bitcoin BTC $84 143 24h volatility: 3.1% Market cap: $1.67 T Vol. 24h: $33.51 B crashing 6.90% in the past 24 hours, dropping below $89,266.65. This marks the first time in over a month that BTC has fallen below the $90,000 level, signaling a potential shift in sentiment as BitMEX co-founder Arthur Hayes predicted that Bitcoin “goblin town” is incoming.
In a post on X (formerly Twitter), Hayes warned that Bitcoin could potentially fall to $70,000 if large hedge funds unwind their positions in US spot Bitcoin exchange-traded funds (ETFs). Outflows from some of the leading ETFs, such as the BlackRock iShares Bitcoin Trust (IBIT), could drive prices lower, according to the crypto entrepreneur.
Hayes explained that many IBIT holders are hedge funds that have employed a strategy of going long on ETFs while simultaneously shorting CME Bitcoin futures. This arbitrage trade allows them to earn a low-risk yield that exceeds short-term US Treasury returns. However, if the “basis spread” (the difference between futures and spot prices) narrows as Bitcoin’s price declines, these funds will sell their IBIT shares and buy back CME futures to lock in their profits.
Given that these hedge funds are currently in profit and the basis spread is approaching Treasury yield levels, a mass unwinding could trigger a sharp drop to $70,000 for Bitcoin. It is important to mention here that Hayes had previously shared a bearish outlook on the United States buying Bitcoin (BTC) as part of its treasury.
According to Hayes, Bitcoin’s volatility could be used as a tool by the Democrats to criticize the Trump administration. The entrepreneur sees this as an unnecessary threat to the price action of Bitcoin, noting that authorities often sell and buy digital assets for their political goals. For the US government, “Bitcoin is just another financial asset,” Hayes said.
While Bitcoin lost the $90,000 price level, prominent analyst Ali Martinez advised his followers on X to act like lions in the wild — waiting patiently for the right moment to strike. He asked traders to “trade with precision, not emotion,” adding that the market is “volatile, unpredictable, and full of traps set by market makers to bait impatient traders into bad positions.”
Martinez explained that a major reason for the decline in the price of cryptocurrencies is the drying up of liquidity. He stated that since December 2024, capital inflows into crypto have dropped by over 70%. The decrease is a “massive warning sign” that crypto market participants have ignored during the recent period.
Notably, Bitcoin’s recent drop is not solely due to hedge fund activity or drying up liquidity. The crypto market has also been shaken by external factors, including the largest-ever hack at Bybit, a major cryptocurrency exchange, and a controversial meme coin scandal involving Argentina’s President Javier Milei.
Caroline Mauron, co-founder of Orbit Markets, told Bloomberg that these incidents have reignited negative sentiment among crypto market participants. The Bybit hack was particularly damaging, adding to a string of recent events that have led to investors losing trust in the space.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
A crypto journalist with over 5 years of experience in the industry, Parth has worked with major media outlets in the crypto and finance world, gathering experience and expertise in the space after surviving bear and bull markets over the years. Parth is also an author of 4 self-published books.
