Crypto Now Braced For A ‘Powder Keg’ That Could Play Havoc With The Price Of Bitcoin And Ethereum

Bit­coin
BTC
, ethereum and cryp­to prices have been trad­ing side­ways for months (though the CEO of one major cryp­to com­pa­ny thinks that could be about to change).

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The bit­coin price has dropped back from year-to-date highs of just over $30,000 per bit­coin, with the ethereum price falling along with it—even as excite­ment over a pos­si­ble end to Rip­ple’s long-run­ning legal bat­tle has helped XRP break out.

Now, after JPMor­gan ana­lysts issued a severe $1.1 tril­lion warn­ing, the for­mer chief exec­u­tive of bit­coin and cryp­to exchange Bit­mex Arthur Hayes has pre­dict­ed a cryp­to mar­ket “pow­der keg” could go off as soon as this year.

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“You’re basi­cal­ly putting this pow­der keg togeth­er of a sit­u­a­tion that’s going to be explod­ing in [the third and fourth quar­ter] of this year, and I think, ulti­mate­ly, it will be good for bit­coin,” Hayes, who now runs a fam­i­ly office called Mael­strom, told the What Bit­coin Did pod­cast. “It will be quite volatile on the upside and the downside.”

Bit­coin, ethereum and oth­er major cryp­tocur­ren­cies have cheered U.S. pres­i­dent Joe Biden’s debt ceil­ing deal; how­ev­er, JPMor­gan ana­lysts last week warned that cryp­to and stock mar­kets are now ner­vous­ly eye­ing what will hap­pen when the U.S. Trea­sury tries to refill its cof­fers.

Hayes, who last year was sen­tenced to two years of pro­ba­tion after plead­ing guilty to charges he failed to imple­ment an anti-mon­ey laun­der­ing (AML) pro­gram at Bit­mex, point­ed to this year’s bank­ing cri­sis and expec­ta­tions the U.S. gov­ern­ment will issue just over $1 tril­lion in new Trea­sury bills in com­ing months, poten­tial­ly suck­ing hun­dreds of bil­lions of dol­lars from the mar­ket, as con­tribut­ing to the “pow­der keg.”

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Next year, bit­coin will under­go its fourth so-called halv­ing sup­ply cut and Hayes expects the bit­coin price to surge in its after­math, as it has done previously.

“I don’t think we get up to $70,000 this year, I think next year is when we cross that bar­ri­er, then we get the blow off top [2025], [2026] and then it’s Armaged­don,” Hayes said, refer­ring to a sig­nif­i­cant soci­etal upheaval such as a major war that could cause a mass pan­ic and a sell-off of all assets, includ­ing bit­coin, ethereum and crypto.

“It doesn’t have to be too straight­for­ward, we just have this sit­u­a­tion, we have this tin­der­box of too much mon­ey, no trust and peo­ple try­ing to eke out a liv­ing for them­selves,” Hayes added.