Arthur Hayes, a significant figure in the cryptocurrency world and founder of BitMEX, recently made astonishing statements, urging investors in his family office MaelStrom to boldly take risks and adjust their risk appetite to 'extreme mode (Degen Mode).' He predicts that this cryptocurrency bull market driven by the 'Trump effect' will surge until mid to late March.
In a blog post published today (7), Arthur Hayes revised his pessimistic forecast made last December, when he believed that 'around the time of Trump's inauguration, Bitcoin would experience a dramatic crash.' However, he now states that the current market's dollar liquidity is abundant enough to offset the risks of policy failures that may arise from the Trump administration. He pointed out:
I still believe this is a negative factor that could drag down market performance in the short term, but it must be weighed against the positive impact brought by dollar liquidity.
So far, the Bitcoin market is dancing with the changes in dollar liquidity.
Does dollar liquidity boost the cryptocurrency market?
Arthur Hayes believes that dollar liquidity is a key pillar of the market. He predicts that in the first quarter of this year, the balance of the Fed's Reverse Repo Facility (RRP) will rapidly decline, possibly approaching zero, which could release $237 billion in liquidity.
Although the Fed is still conducting quantitative tightening (QT), which is generally seen as a negative factor for dollar liquidity, Arthur Hayes indicated that the Fed has lowered the RRP rate, decreasing the attractiveness of this tool for financial institutions. Therefore, institutions might reinvest these idle funds back into the market.
On the other hand, the U.S. Treasury faces pressure from the debt ceiling and must take some 'extraordinary measures' to maintain normal government operations, including using funds from the Treasury General Account (TGA) to cover expenses.
Arthur Hayes predicts that this will further inject liquidity into the market. He estimates that the U.S. Fed and Treasury will release a total of $612 billion in liquidity in the first quarter.
After March, facing liquidity pressure, the cryptocurrency market may peak.
Arthur Hayes further mentioned that as TGA funds are nearing depletion in March, the negative factors of dollar liquidity will gradually emerge, such as raising the debt ceiling and the tax payment deadline on April 15.
In addition, he pointed out that the Trump administration's policy execution capabilities, whether it can quickly reduce government spending, and the interest rate policies of other global economies (such as the Bank of Japan) will all be potential variables affecting the market.
Betting on decentralized science (DeSci)
Based on the above analysis, Arthur Hayes stated that Maelstrom has shifted its investment focus to the decentralized science (DeSci) sector and has purchased DeSci-related tokens such as BIO, VITA, ATH, GROW, PSY, CRYO, and NEURON.
Arthur Hayes concluded in his article: 'Although the future is still full of uncertainties, taking all factors into account, I remain optimistic about the market.'
"Wasn't it said that there would be a crash 'around Trump's inauguration'? Arthur Hayes changes his stance: the bull market will peak only in March," this article was first published on (BlockGeek).
