BitMEX co-founder Arthur Hayes predicts that Bitcoin and the overall cryptocurrency market will peak before mid-2025, followed by a sharp correction. Hayes bases his prediction on the changing conditions of US dollar liquidity in Q20 2025, once Donald Trump returns to the White House on January 1.
Crypto Market to Peak in Early 2025
Arthur Hayes predicted in his blog post published on January 7 that the rise in the cryptocurrency market will be limited to the first quarter of 2025. Hayes stated that with Trump returning to the White House, business and crypto-friendly policies will continue to increase the value of Bitcoin and other crypto assets, and warned that the market could decline after reaching its peak around March. Hayes emphasized that especially the US Dollar liquidity will continue to fuel optimism in the cryptocurrency market during this period, and he thinks that the policy changes of the US Federal Reserve (Fed) and the Treasury Department will affect the price movement of Bitcoin.
The Fed’s Reverse Repo Facility (RRP) had increased global liquidity similar to its peak in the third quarter of 2022. Hayes, who noted that the Bitcoin price found a bottom and then rose during this process, predicts that the Fed’s quantitative tightening (QT) policy will cause a monthly liquidity withdrawal of $60 billion until mid-2025. This will seriously reduce liquidity in the financial system. However, Hayes states that short-term concerns will not pose a major threat, as he believes that other sources of liquidity will compensate for this contraction. He adds that liquidity will be injected into the market, especially if the debt ceiling is raised on time through the US Treasury’s General Treasury Account (TGA).
Hayes expects a total injection of $612 billion into US dollar liquidity by the end of March 2025. If that happens, Bitcoin and the broader crypto market will receive a significant boost. It remains unclear whether Trump’s political power will solve the debt ceiling problem. Hayes believes that if the debt ceiling problem is resolved, the crypto market could see a strong rally in the first quarter of 2025.
Correction Expected After First Quarter of 2025
Arthur Hayes advises investors that a significant upward trend may occur in the cryptocurrency market in the first quarter of 2025. However, he predicts that the rise will not continue after the first quarter of 2025, as liquidity conditions tighten and Trump's pump effect decreases. Therefore, Hayes expects the market to enter a corrective phase after the first quarter. It seems likely that Bitcoin and other cryptocurrencies will experience serious pullbacks, especially with the decrease in fiscal and monetary support. In addition, the tax season starting in mid-April and the decrease in liquidity in the TGA may create a squeeze in the market. Hayes states that this situation may negatively affect investor sentiment. According to Hayes, the pullback that occurred after the local peak experienced by Bitcoin in mid-2024 may manifest itself as a similar correction movement in 2025.
"Degen" Mode: 7 Altcoin Selection
Hayes remains optimistic about the first quarter of 2025, announcing that his firm Maelstorm plans to switch to “DEGEN mode” and specifically invest in decentralized science (DeSci) projects. His portfolio includes tokens such as BIO, VITA, ATH, GROW, PSY, CRYO, and NEURON. Bitcoin is currently up over 10% on the week, topping $102,000. Amid this recent surge, 24-hour liquidation has reached $58 million, $47 million of which is from short selling, according to Coinglass data. Furthermore, open interest value has increased by 4%, highlighting the optimism among futures traders.