BitMex founder Arthur Hayes said the Bitcoin and Ethereum could be primed for severe losses if they dropped below a certain level.
For Bitcoin, Hayes sees a drop below $20,000 causing a spot-selling cascade. He sees a similar scenario playing out for Ethereum if it falls below $1,000. Hayes says that open interest and positioning in the options market is driving his prediction.
Bitcoin is currently trading around $22,000, while Ethereum is just above $1,200. Both tokens have capitulated heavily in the past 24 hours, and likely face further weakness.
Concerns over a Federal Reserve rate hike this week, rising inflation and potential chaos in the options market have driven the recent crypto rout.
Why are $20K and $1K crucial for Bitcoin and Ethereum?
In a Twitter thread, Hayes said that if Bitcoin and Ethereum were to breach the levels, it would place “massive sell pressure” in the spot markets, due to dealers having to post more collateral to maintain their positions.
