BitMEX Co-Founder Explains Why Bitcoin Hasn't Reached $70,000

Arthur Hayes, co-founder of BitMEX, had previously predicted that Bitcoin's price would surge to $70,000 after March 2023. However, the actions of the United States Federal Reserve (FRS) have played a significant role in preventing this prediction from becoming a reality. The FRS decision to increase interest rates on three separate occasions has had a dampening effect on Bitcoin's price.

Hayes suggests that the focus on the nominal interest rate set by the FRS, rather than the real interest rate, is a key factor in Bitcoin's inability to reach the $70,000 mark. To understand this better, it's essential to consider how the market perceives real interest rates, which take into account factors like inflation and other economic variables.

According to Hayes, Bitcoin's price dynamics are heavily influenced by the market's perception of real interest rates, which account for inflation and other economic factors. In essence, it's not just the interest rate itself that matters but how it aligns with the broader economic context. When real interest rates are low or negative, investors may see Bitcoin as an attractive hedge against inflation and a store of value, thus driving up demand.

Arthur Hayes also pointed out that non-traditional monetary and credit policies, mounting government debt, and a shifting economic landscape have continued to make Bitcoin an appealing investment. This is further supported by the scarcity of Bitcoin on cryptocurrency exchanges, where supply and demand dynamics come into play.