Bitcoin Tumbles Below $90K: Analysts Predict Local Bottom While Arthur Hayes Eyes $250K by Year-End Amid Liquidity Squeeze

Bitcoin (BTC) experienced another significant downturn today, briefly breaching the critical $90,000 mark and plummeting to a near 7-month low. This extends a multi-day pullback, further chilling market sentiment across the cryptocurrency landscape. Amidst the volatility, BitMEX co-founder Arthur Hayes has offered a stark short-term forecast, predicting a potential slide to the “$80,000 – $85,000” range. However, he posits that a pivotal shift could occur by year-end, with Bitcoin potentially rocketing to “$200,000 – $250,000” should the Federal Reserve (Fed) and Treasury unleash fresh liquidity.

Following a fleeting rebound during yesterday’s Asian trading hours, renewed selling pressure emerged with the opening of US markets, a trend that has persisted without respite. As of this writing, Bitcoin trades around $90,182, reflecting a more than 5% decline over the past 24 hours. Earlier today, the flagship cryptocurrency touched an intraday low of $89,779.72.

This latest correction has effectively erased all of Bitcoin’s year-to-date gains, marking a substantial 28% retreat from its all-time high of $126,080, achieved just over a month ago.

Bitfinex Analysis: Is Bitcoin Nearing a “Local Bottom”?

As market sentiment continues its descent, the Bitfinex analysis team offers a glimmer of hope, suggesting that Bitcoin may be approaching a “local bottom.” Their observations highlight a gradual stabilization in on-chain “realized losses”—the actual losses incurred by users selling their assets on the blockchain. This trend historically precedes technical rebounds.

“Historically, every sustainable market bottom is forged only after short-term holders have fully capitulated and sold at a loss.”

The Bitfinex team believes the market is now nearing this crucial threshold. The immediate prospect of stabilization hinges on whether the current “capitulation selling pressure” is sufficient to exhaust the remaining selling momentum. They further note that this ongoing downturn represents the third-largest correction since 2023 and the second most significant pullback since the launch of US spot Bitcoin ETFs. Based on these indicators, they estimate that a meaningful “local bottom” might “not be far off.”

Arthur Hayes’ Dual Forecast: Short-Term Pain, Long-Term Gain

Concurrently, Arthur Hayes, in his latest commentary, attributes Bitcoin’s current decline primarily to “tightening USD liquidity,” rather than any fundamental shift in its underlying value. He argues that the diminishing capital flows from spot ETFs and institutional hoarding companies have re-exposed the market to a challenging liquidity environment.

Hayes points out that the USD liquidity index has contracted by approximately $1 trillion since July. The withdrawal of ETF arbitrage funds and the shift from premium to discount trading for companies accumulating Bitcoin have stripped the asset of its “pseudo-buying demand,” necessitating a market correction to realign with current liquidity realities.

Consequently, he projects that Bitcoin could see a further decline to the “$80,000 – $85,000” range in the near term, potentially correlating with emerging credit events and an uptick in US Treasury yields.

However, Hayes’ long-term outlook remains remarkably bullish. He anticipates that if US equities experience a 10% to 20% correction and US Treasury yields continue their upward trajectory, the Federal Reserve and Treasury will be compelled to “open the spigot” once more, injecting liquidity into the system. Under such conditions, he foresees Bitcoin rapidly ascending to an ambitious target of “$200,000 – $250,000” by the close of the year.