Arthur Hayes, the digital Provocateur who founded BITMex, always has a spicy take when it comes to the crypto market. He thinks that the Bitcoin bottom is in.

Here are his arguments in bullet form: 

* Bitcoin’s role as crypto’s “reserve asset” is undisputed during difficult times.

* Three entities were forced to puke out BTC during the fall: 1) centralized lending and trading firms, 2) mining operations, and 3) ordinary speculators.

* Misuse of leverage was the cause of these liquidations, whether by firm or individual. 

Let’s dive into each of the three:

Centralized Lending Destruction

Regarding the centralized lending firms, some bankruptcies were due to “duration mismatches” because lenders receive deposits that can be recalled on a short time frame against loans on those deposits on a longer time frame. The centralized lending firm might then go insolvent or bankrupt. 

In order to generate cash, these centralized lending firms will try to recall all downstream funds; everything rolls downhill. 

Because of the nature of these over-leveraged relationships, Hayes feels that there is no appreciable Bitcoin left to sell from these firms. 

Miners

Hayes also believes that the Miners have had to part with a huge amount of BTC due to the dropping price and increasing power bills. 

Miners recently hit a peak of off-load transfer; this means that many have gone out of business due to the drop in hashrate. 

Speculators

The third group to get blown out have been BTC speculators. High open interest on the BTC perpetual swap contract. The more open contracts there are, the higher the Open Interest: 

High Open Interest always points to market highs, when the greatest number of small traders are speculating. The current low Open Interest means that most of the over-leveraged positions have been destroyed. 

What’s not known is if the OI could drop further with more traders finally cashing in their hand. However, most of the destruction has occurred. 

Perhaps now is the time to DCA?