Hayes highlights open interest data for BTC and ETH, which are at $20,000 and $1,000.
He says the closer the market goes to those strike prices; the more will be sold, leading to a potentially large sell-off.
The market crash has had an enormous impact on the growth of the market, with several companies conducting layoffs.
BitMEX founder and CEO of 100x Arthur Hayes has some ominous news for those in the market. Hayes tweeted on June 14 that the market would see a further sell-off, if BTC sinks below $20,000 and ETH below $1,000. He believes that breaching those levels would result in massive sell pressure, after having looked at options data from the Deribit exchange.
Hayes first pointed to onchain data about wrapped bitcoin and ETH, which shows a lot of liquidations taking place already. But it’s the information from Deribit that remains the most concerning. Open Interest for BTC is at $20,000, and $1,000 for ETH.
If those targets are met, it would not be surprising to see a further sell-off. Those levels are significant psychological levels for the assets, which have not been touched since 2020. The amount of BTC liquidations that have taken place in the last 24 hours amount to $513 million, while ETH liquidations stand at $306 million.
Hayes explains that as the prices get closer to the strike, more must be sold — it is simply part of a hedging technique. He also warns that there may be some OTC dealers that will not be able to hedge properly, resulting in devastating losses for them.
He concludes by implying that should massive sell-off take place, the crypto winter may continue for a while. He says,
“As far as the charts go, you better get out your Lord Satoshi prayer book, and hope the lord shows kindness on the soul of the #crypto markets. Bc if these levels break, you might as well shut down your computer bc your charts will be useless for a while.”
Investors Must Endure As Crypto Winter Takes Place
The crypto market bloodbath has not slowed down, as some investors were hoping earlier this week. Bitcoin’s price is dangerously close to its $20,000 levels, and that could spell bad news in the short term.
The consequences have been tough even for crypto companies. Several firms, including BlockFi and Gemini, have had to conduct layoffs. Others are on hiring freezes, unable to expand their business because of the market conditions.
Of course, the market is filled with diehard believers who see this as nothing but a blip in the overall progress of the crypto market. Such crashes have taken place before, and bitcoin and others have rebounded each time. This time, however, with more institutional money and wider retail adoption, the bounce back might be slower and different.