Bitcoin ($BTC) is witnessing a bearish momentum, with analysts attributing this decline to diverse macro factors. Specifically, Arthur Hayes, co-founder of BitMEX, has pointed toward the liquidity crash of USD as the main reason behind Bitcoin’s ($BTC) ongoing downtrend. In his latest analytic report, Arthur Hayes asserted that the waning ETF arbitrage operations and decreasing flows related to Digital Asset Treasury (DAT) are significant contributors to this plunge. As per him, these things have eliminated noteworthy demand drivers that formerly backed liquidity. Today, BTC is trading at $84,541, with a 23% drop in the last 30 days.

USD Liquidity Crash and Massive ETF Outflows Drive Bitcoin Decline, Says Arthur Hayes

The market statistics reveal that USD liquidity has massively crashed, leading to Bitcoin’s ($BTC) drop. Additionally, irrespective of the apparently promising flexible monetary conditions, the actual liquidity indicators signify tightening instead of expansion. Thus, the top crypto asset may see a continuous decline toward the $80K-$85K range.

At the same time, institutional players are now outright bullish on the top cryptocurrency. Apart from that, hedge funds also unwound positions, leading to ETF outflows that resulted in market-wide sell-offs. Simultaneously, diminishing premiums pushed toward minimized Bitcoin ($BTC) buyouts. Hence, the disappearing inflows have pointed toward the underlying liquidity squeeze.

Keeping this in view, the Bitcoin ($BTC) traders are shifting their strategies amid the uncertain market conditions. However, despite the possibility for $BTC to face deeper corrections, the long-term price trajectory of the flagship cryptocurrency is still strongly bullish. Based on the market data, the current market scenario could serve a crucial role in starting an aggressive rebound in Bitcoin’s price.

Liquidity Reset Paves Way for Bitcoin’s Potential Upside

According to Arthur Hayes, Bitcoin’s ($BTC) current slump, in which the liquidity crunch of USD has made a great contribution, denotes the preparation for the next rally. In this respect, he has anticipated the $200K-$250K range as the next price target for the leading crypto coin by this year’s end. Additionally, while the worldwide central banking institutions are inclined toward easing, Bitcoin is ready to reclaim its top position as a prominent reflationary beneficiary.