Bitcoin Price Targets $70,000 if Trump's Budget Plans Falter

Arthur Hayes, founder of BitMEX, believes Bitcoin's near-term price trajectory is closely tied to US political developments. According to him, investors should 'chill out, retrace and wait' for now.

If Trump's budget plans falter and he can't pass a bill that increases spending and hikes the debt ceiling, Hayes predicts a significant drop in Bitcoin's price. He mentioned that if this happens, Bitcoin could fall to levels seen pre-election day victory, ranging from $75,000 to $70,000.

Hayes warned that many hedge funds that invested in BlackRock's iShares spot Bitcoin exchange-traded fund (IBIT) may exit their positions if Bitcoin continues its downward trend. These institutional investors adopted a specific yield-generating strategy by going long on ETFs and shorting CME futures.

If the basis drops as BTC falls, these funds will sell IBIT and buy back CME futures, Hayes explained. He added that since these funds are in profit and their basis is close to US Treasury yields, they will unwind their positions during US hours and realize their profits.