Deep Tide TechFlow news, on January 7, BitMEX co-founder Arthur Hayes stated in his latest blog post that he believes the cryptocurrency market will peak in mid-March and then experience a severe correction.
The article stated that previously in the third quarter of 2022, Bitcoin hit bottom when the Federal Reserve's reverse repo tool peaked; Yellen adjusted bond strategies, withdrawing over $2 trillion from RRP to inject liquidity into the market, driving cryptocurrencies and stocks to surge. In the first quarter of 2025, the market will focus on whether dollar liquidity can offset the slow implementation of Trump’s policies. If liquidity is sufficient, increasing risk exposure will be a safe choice. The Federal Reserve's factors are secondary in the analysis, with a focus on how the Treasury will respond to the debt ceiling. If politicians hesitate, the Treasury may inject liquidity from the General Account (TGA), creating a positive atmosphere for cryptocurrencies. The Federal Reserve's quantitative tightening policy continues, but the RRP scale is nearly zeroed out, and RRP rates are lowered to reduce attractiveness. This move aims to boost demand for U.S. bonds and pave the way for stopping QT and other policies. Yellen revealed that the Treasury expects to take "extraordinary measures" to raise funds in mid-January. When the debt ceiling is agreed upon by politicians, it will test Trump’s support. It is expected that from May to June, the balance of the Treasury's General Account (TGA) will be exhausted, and the market may react in advance. By the end of the first quarter, the total amount of dollar liquidity from the Federal Reserve and the Treasury is expected to be $612 billion. As the risk of default and government shutdown approaches, an agreement will be reached to raise the debt ceiling, allowing the Treasury to resume borrowing and replenish the TGA, leading to a reduction in liquidity. After the tax deadline on April 15, the government's financial situation will improve, and liquidity will also decrease. If the TGA balance dominates cryptocurrency prices, the market may reach a high point by the end of the first quarter and then decline. Yellen lowered the rate for issuing short-term Treasury bills, causing Powell's strategy of tightening financial conditions to combat inflation to fall short. Although Trump's team may perform poorly in cryptocurrency and corporate legislation, a positive dollar liquidity environment may offset this impact.
Hayes stated: "I advise investors to sell in the late first quarter and wait for liquidity conditions to improve in the third quarter. As the Chief Investment Officer of Maelstrom, I suggest risk-takers switch to an aggressive mode and venture into the decentralized science (DeSci) altcoin space. If things go well, I will reduce baseline positions in March."