In the medium term, the halving is a bullish catalyst for the crypto market. However, prices may fall immediately before and after the event, according to former BitMEX CEO Arthur Hayes.

“Heatwave” is an essay on why I’m bearish despite the recent move higher in #crypto markets.https://t.co/gZ8Vl1uC04 pic.twitter.com/fH6docB499

— Arthur Hayes (@CryptoHayes) April 9, 2024

The narrative that the halving of block rewards will have a positive impact on cryptocurrency prices has firmly taken root. When the majority of market participants agree on a certain outcome, the opposite usually happens,” the expert said.

He noted that in the second half of April, the market will face a reduction in dollar liquidity. This will be caused by tax season, the Federal Reserve’s quantitative tightening (QT) policy, and the strengthening of the Treasury’s balance sheet.

This factor will serve as an additional stimulus for “fierce selling in cryptocurrencies,” believes Hayes.

“Can the market challenge my bearish tendencies and continue to rise? Hell yes. I’ve been involved in cryptocurrency for a long time, so I welcome my wrongness,” he admitted.

According to the expert’s expectations, after May 1, the Federal Reserve will reduce the pace of QT, and the Treasury will likely inject “another $1 trillion of liquidity into the system, which will pump up the markets.”

Hayes added that the “bag of tricks” from regulators only reinforced his decision to refrain from trading Bitcoin until the aforementioned date.

“If I miss out on a few percentage points of profit but definitely avoid losses for my portfolio and lifestyle, that’s an acceptable outcome,” said the trader.

He reported that he “took full profit” on positions in MEW, SOL, and NMT, which he invested in USDe from Ethena for staking.

Recall, the DeFi project implemented Hayes’s ideas in the mechanism of its “synthetic dollar.”