According to BitMEX co-founder Arthur Hayes, cryptocurrencies are poised for significant volatility in the latter half of April, driven by the Bitcoin halving event and actions by the United States Federal Reserve and the Department of the Treasury.

In an April 8 blog post, Hayes expressed his belief that the Bitcoin halving would boost prices in the medium term but cautioned that prices could experience negativity before and after the event due to the prevailing narrative.

Hayes argued that the halving coincides with a period of tighter dollar liquidity, and he outlined his theory on how Federal Reserve and Treasury policies could impact the markets, suggesting that they would exacerbate a downward trend in crypto asset prices.

He acknowledged the possibility of the market defying his bearish outlook and continuing to rise, stating his long-term bullish stance on cryptocurrencies despite his current cautious approach.

Hayes highlighted the second half of April as a precarious period for risky assets due to U.S. tax payments reducing liquidity, the Federal Reserve initiating quantitative tightening, and the Treasury's general account remaining unused.

He anticipated a potential market pump after May 1, following the Fed's meeting, and the release of additional liquidity from the Treasury, which could stimulate markets.

As a result of these factors, Hayes announced his decision to refrain from trading until May.

Bitcoin has seen significant gains year-to-date, rising over 61%, but market sentiment, as measured by the Crypto Fear and Greed Index, has also been climbing, reaching "Extreme Greed" levels on April 9.

Hayes concluded by stating that if his liquidity scenarios materialize, he would have more confidence to invest in various assets, prioritizing the preservation of his portfolio and lifestyle over chasing maximum gains.