YEREVAN (CoinChapter.com) —Bitcoin (BTC) hit $77,000 on March 10, marking its lowest level since November 2023, according to CoinMarketCap data. BitMEX co-founder Arthur Hayes suggested that this could be the bottom for Bitcoin, citing the Federal Reserve’s decision to slow quantitative tightening (QT).
In a March 20 X post, Hayes stated, “Was BTC $77K the bottom? Prob,” after the Fed announced plans to cut its monthly Treasury cap from $25 billion to $5 billion starting in April. He described QT as “basically over.”
Bitcoin and the impact of quantitative tightening
Quantitative tightening (QT) is a policy where central banks sell assets to reduce liquidity. Analysts have noted that this can affect Bitcoin price movements, as reduced liquidity often leads to weaker demand for risk assets.
With the Fed reducing its QT efforts, some analysts expect a shift in liquidity conditions. Hayes pointed out that the next step to monitor is whether the Supplementary Leverage Ratio (SLR) exemption returns or if the Fed restarts quantitative easing (QE).
The SLR exemption, which was in place during the COVID-19 pandemic, allowed banks to exclude U.S. Treasury securities from certain leverage calculations. Quantitative easing (QE), in contrast, involves the Fed buying assets to inject liquidity into financial markets.
Analysts suggest QT is no longer in play
Real Vision chief crypto analyst Jamie Coutts supported Hayes’ view, stating in a March 19 X post that “QT is effectively dead”. He pointed to declining U.S. Treasury volatility and a weaker U.S. dollar as signs that market conditions could be shifting.
Several industry figures reacted to the Fed’s move. Axie Infinity co-founder Jeff “JiHo” Zirlin described the slowdown as a positive shift for crypto and equity markets.
Bitcoin venture capitalist Mark Moss added that with QT ending, “the dam is going to break.”
Crypto market sentiment shows recovery
Following the Fed’s announcement, crypto market sentiment improved. The Crypto Fear & Greed Index, which measures market sentiment, moved into “Neutral” territory at 49, up from the “Fear” zone where it had remained since February 26.
Despite Bitcoin trading 22% below its all-time high of $109,000 in January 2024, some analysts consider the correction part of the market cycle. Infinex founder Kain Warwick commented,
“I would need to see a much larger breakdown to flip bearish.”
He described the decline as a “normal mid-bull correction.” While some analysts highlight the potential impact of reduced QT on Bitcoin liquidity, others remain cautious. Market participants continue to monitor the Fed’s actions and their effect on Bitcoin price movements.