The CEO of the world’s largest bitcoin derivatives trading platform believes the current crypto bear market could last a further 18 months.
Bitcoin (BTC-GBP) surged to a high of over $20,000 (£15,676) in December last year but crashed at the start of 2018 and has traded in a tight range close to $6,300 for the past few months. If the performance persists, 2018 is set to be the worst year on record for bitcoin in terms of percentage decline.
BitMEX CEO Arthur Hayes told Yahoo Finance UK: “My view is the volatility environment that exists right now could persist for another 12 to 18 months, the flatness.
“I’m just basing it off my previous experience. I started in bitcoin in 2013 when the price went from $250 to $1,300 and then 2014 to 2015 was sort of the nuclear bear market. Price crashed, volume crashed — very, very difficult to make money.”
Former Deutsche Bank and Citi trader Hayes co-founded BitMEX in 2014. The Seychelles-registered platform allows people to take out and trade peer-to-peer bitcoin derivative products such as futures.
Hayes, who was speaking to Yahoo Finance UK at an event in London organised by The Spectator magazine, added that he believes conditions could get even worse. He said: “We think trading volumes could fall further from where they are now.”
‘We are in a bull market’
While Hayes is bearish on the immediate prospects for bitcoin, others in the industry were more upbeat.
Will Warren, the cofounder of decentralised crypto exchange 0x, told Yahoo Finance UK in a phone interview: “Having followed this space since 2011, we’ve seen a number of different cycles where a large number of people start to get interested in the technology and it kind of winds up and then winds downs again.
“The market is blowing off some steam right now,” he added. “I think the market is probably going through some healthy consolidation but I do believe the long-term trend will be greater adoption of bitcoin and similar technologies.”
Mati Greenspan, an analyst with trading platform eToro, said: “In 2016 the gains started very gradually until it snowballed. Now that awareness and education have skyrocketed, I have a feeling that it’s going to happen a lot quicker the next time.”
Jonathan Levi, a former Barclays and Goldman banker who now helps banks implement blockchain as CEO of startup HACERA, told Yahoo Finance UK: “I think when the bear market is put in context it gives you more clarity – you’re looking at a bear sized drop but from an astonishing height.
“The price of bitcoin is undoubtedly in a bear market but in the application of bitcoin and other blockchain projects we are in fact in a bull market. Most of the EU banks are actively investing in blockchain and that all originally stems from bitcoin.”
‘We’re positioned to weather the low volatility’
Despite the recent tail-off in volumes and volatility for bitcoin, BitMEX still sees daily trade on contracts with a notional $1bn each day. Earlier this year it recorded its biggest ever day, with $8.5bn of contracts written.
“We think we’re well positioned to weather the low volatility,” Hayes told Yahoo Finance UK.
“There are some reports of other OTC dealers and exchanges letting go of employees because obviously volumes have fallen and they hired aggressively. Our expansion plans have not changed, we continue to hire across the whole organisation and we have the balance sheet resources to continue that activity.”
Yahoo Finance reported last week that Coinbase, one of the largest bitcoin exchanges, cut around 15 staff across a range of departments.