Arthur Hayes, co-founder of BitMEX, doubts the US will expand its Bitcoin reserves due to high national debt and negative stereotypes around Bitcoin users. Following Trump’s executive order for a strategic Bitcoin reserve, concerns arise about market impact if the government begins purchasing Bitcoin. Meanwhile, Hayes remains bullish on Bitcoin’s dominance returning to about 70%, though skepticism exists among analysts about reaching that level once more.
In a recent commentary, Arthur Hayes, co-founder of the cryptocurrency exchange BitMEX, expressed skepticism about the US government purchasing additional Bitcoin. He noted that, given America’s significant debt, it’s hard to envision politicians announcing plans to acquire more Bitcoin to create a strategic reserve. Most of the Bitcoin in reserve originates from seizures linked to criminal investigations, amounting to just over 198,000 tokens worth more than $18 billion.
Hayes also indicated that the image of the so-called ‘Bitcoin bros’ adding a more casual, club-like atmosphere to the crypto narrative complicates the government’s potential strategy. He mused, “It’s difficult to imagine the government saying they will print money to buy Bitcoin when this stereotype exists.” This sentiment reflects the prevailing reluctance to openly embrace Bitcoin as part of a national reserve amid public perceptions.
On March 6, President Donald Trump signed an order creating a Bitcoin strategic reserve in efforts to harness the digital currency’s growing relevance. The Bitcoin horde seized in operations like the Silk Road and the Bitfinex hack comprises the majority of these holdings. Yet Hayes highlights that institutional efforts to buy Bitcoin could disrupt market dynamics significantly.
Sergej Kunz, from the exchange aggregator 1inch, pointed out that if the US were to ramp up its Bitcoin holdings, other nations might react swiftly to secure their own positions in the crypto market. Kunz warned, “Countries could begin to compete for Bitcoin ownership, and the US will inevitably lead that charge.” This possible domino effect raises concerns about market accessibility for smaller players in the crypto space.
Regarding market trends, Hayes remains optimistic about Bitcoin’s dominance returning to previous highs, closer to 70%. He believes the pattern from earlier cycles, particularly 2021, will repeat itself where Bitcoin leads the charge before capital flows into altcoins. “It’s back at all-time highs; bull markets are returning, which should favour altcoins,” he commented, while acknowledging that performance hinges on specific altcoin selections.
Currently, Bitcoin dominance sits at about 64.78%, strengthening from the nearly 60% threshold it hovered around at the start of the year. Some analysts contend that the chances of Bitcoin reclaiming the 70% mark are slim. Benjamin Cowen, from Into The Cryptoverse, argues that he doesn’t expect Bitcoin dominance to climb back up, maintaining a more conservative outlook towards the 60% level for dominance.
In a shift in the sector, Ki Young Ju from CryptoQuant noted that the traditional indicators for altcoin seasons have evolved. He suggested that the defining signals, like capital rotation from Bitcoin to altcoins, might no longer apply, as rising altcoin trading volume now also hinges on stablecoin and fiat currency pairs.
