Arthur Hayes, the former CEO of BitMEX, recently ended his short position on Bitcoin amidst initial worries of a significant price correction over the weekend.

On September 6, Hayes noted that Bitcoin (BTC) could potentially drop below the $50,000 psychological threshold as he opened a short position to take advantage of a downturn.

Following soothing signals for investors, Hayes disclosed that he had closed his short Bitcoin position. He expressed optimism for a Bitcoin rally in the coming week in a post made on September 8:

“Closed my $BTC short, made 3% profit… With Bad Gurl Yellen watching markets and releasing a weekend statement, if stuff continues to puke next week BTC *MIGHT* rise anticipating more USD liquidity.”

Hayes believes that Bitcoin’s value might surge soon, driven by increased liquidity from the Federal Reserve. This expectation stems from perceived weaknesses within the economy and financial markets.

Potential Bitcoin Price Rally Linked to US Monetary Policy

Anticipations of further liquidity injections from the world’s largest economy could profoundly impact investor sentiment and Bitcoin price trends.

Continued downturn in conventional markets may indeed prompt a liquidity response from the Federal Reserve, as Hayes remarked on September 7:

“Bad Gurl Yellen is watching, if markets go down more she will definitely pump up the jam by printing more money.”

The M2 money supply, which includes all cash and short-term bank deposits in the US, might be pivotal for the next Bitcoin rally, as noted by Jamie Coutts, Chief Crypto Analyst at Realvision, who stated:

“This is due to a high correlation with $BTC bull cycles. Of the big three I track in my Bitcoin/Liquidity framework, Global M2 appears to capture most of the moves.”

While the total value of the money supply is essential, its rate of change is even more critical, highlighting that “Bitcoin usually moves with shifts in M2 momentum,” Coutts added.

At the start of May, the M2 money supply exhibited positive growth year-over-year for the first time since November 2023, indicating that investors may soon seek hedges against inflation, such as Bitcoin.

Current Bitcoin Trends Align with Historical Patterns

This week, investor confidence was shaken by concerns surrounding a potential decline beneath $50,000, leading to a decidedly negative market sentiment.

Nonetheless, the observed downturn in Bitcoin mirrors historical halving cycle trends, as shared by the noted analyst Rekt Capital:

“When BTC retraced -7% in September in 2021, BTC rallied +39% in the following October. Bitcoin is currently down -9% this September.”

Historically, September has been marked by volatility, with average Bitcoin returns reflecting a -4.69% trend, making it traditionally the most bearish month according to available data.

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