The Bitcoin halving this month, combined with a “bag of tricks” from the Federal Reserve and Treasury, will “add propellant to a raging firesale of crypto assets” and depress the crypto market for weeks, says BitMEX co-founder Arthur Hayes.

In an April 8 blog post, Hayes wrote he believed the Bitcoin halving would “pump prices in the medium term” but warned crypto prices “directly before and after could be negative.”

“The narrative of the halving being positive for crypto prices is well entrenched. When most market participants agree on a certain outcome, the opposite usually occurs,” he wrote.

Hayes believed the halving is also timed for when “dollar liquidity is tighter than usual” and outlined his theory on how the United States Federal Reserve and Treasury policies impact the markets.

“That is why I believe Bitcoin and crypto prices in general will slump around the halving [...] It will add propellant to a raging firesale of crypto assets.”

“Could the market defy my bearish inclinations and continue higher? Fuck yeah,” he wrote. “I’m perennially long as fuck crypto, so I welcome being wrong.”

Hayes noted the second half of April will be a “precarious period for risky assets” as U.S. tax payments remove liquidity, the Fed starts Quantitative Tightening (QT), decreasing the money supply, and the Treasury’s General Account (TGA) — basically the government’s checking account — is yet to be used, Hayes wrote.

After May 1, following the Fed’s meeting on the same day, Hayes said he expects it to reduce the pace of money supply tightening, and the Treasury will release from the TGA “most likely, an additional $1 trillion of liquidity into the system, which will pump markets.”

Related: Bitcoin needs to hold above $80,000 to keep mining profitable post-halving

Hayes said the halving and the Fed and Treasury’s “bag of tricks” is why he’s decided to “abstain from trading until May.”

Bitcoin (BTC) is up over 61% year-to-date, climbing from around $42,200 to trade at $71,170. according to Cointelegraph Markets Pro.

The market sentiment measuring Crypto Fear & Greed Index has also climbed over that time, staying in the “Greed” marker — needing a score of 50 out of a total possible of 100 — or above since Jan. 27.

The score for April 9 showed “Extreme Greed” with a score of 80, up from 76 the day prior.

It started the year at a score of 65, meaning “Greed,” but hit a high of 90 on March 5 — its highest in two years.

Hayes wrote that if the liquidity scenarios he theorized come true, it would give him “much more confidence to ape into all manner of dogshit.”

“If I miss a few percentage points of gains but definitely avoid losses for my portfolio and lifestyle, that is an acceptable outcome,” he added.

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