$77K likely the Bitcoin bottom as QT is ‘effectively dead’ – Analysts

Bitcoin is unlikely to revisit the $77,000 price level anytime soon after the Fed signaled a slowdown in quantitative tightening (QT), says BitMEX co-founder Arthur Hayes.

On March 10, Bitcoin (BTC $85,859) dipped near the $77,000 level for the first time since November, according to CoinMarketCap data.

“Was BTC $77k the bottom, prob,” Hayes said in a March 20 X post after declaring that QT is “basically over” following the Fed’s March 19 announcement that starting in April, it will slow its securities sell-off by reducing the monthly Treasury cap from $25 billion to $5 billion. 

Bitcoin is up 3.53% over the past seven days. Source: CoinMarketCap

This could ease liquidity pressures and support risk assets like Bitcoin, as QT involves central banks selling assets to reduce the money supply and possibly raise interest rates. 

“The next thing we need to get bulled up for realz is either SLR exemption and or a restart of QE,” Hayes added.

The Supplementary Leverage Ratio (SLR) exemption was a temporary rule during the COVID-19 pandemic that allowed banks to exclude US Treasury securities from their SLR calculations. Meanwhile, quantitative easing (QE) is a monetary policy that aims to stimulate the economy and encourage more spending.

Echoing a similar sentiment to Hayes, Real Vision chief crypto analyst Jamie Coutts said in a March 19 X post that “QT is effectively dead.” Coutts explained that “treasury volatility” has calmed down following the US dollar's drop earlier this month, a positive signal for boosting liquidity.

Other optimists included Axie Infinity co-founder Jeff “JiHo” Zirlin, who said the Fed slowdown is “great for both crypto and equity markets.”

“The Fed has significant leeway to loosen up, providing more support for businesses + markets,” Zirlin said, while Bitcoin venture capitalist Mark Moss said that with QT ending, “the dam is going to break.”

Meanwhile, crypto market sentiment has spiked following the Fed’s comments. 

The Crypto Fear & Greed Index, which tracks overall sentiment, has moved into “Neutral” territory at 49 after lingering in the “Fear” area since Feb. 26.

Despite Bitcoin being down nearly 22% from its January $109,000 all-time highs, Infinex founder Kain Warwick told Cointelegraph that it is a “normal mid-bull correction.”

“I would need to see a much larger breakdown to flip bearish,” Warwick said. “My baseline thesis is the four-year cycle holds once again, which means we keep grinding up through the rest of the year.”

---