Hayes: U.S. Fed money printing could stimulate Bitcoin's rally in the first quarter of 2025
The cryptocurrency regulations of the incoming Trump administration and the trajectory of U.S. Federal Reserve monetary policy remain the main factors influencing Bitcoin's price trajectory.
Hayes: U.S. Fed money printing could stimulate Bitcoin's rally in the first quarter of 2025
NEWS
Bitcoin could benefit from over $612 billion in new liquidity during the first quarter of 2025, potentially mitigating investor concerns about delays in cryptocurrency regulations in the United States.
Bitcoin
tickers down
€92,251
fell nearly 6% in the 24 hours leading up to 8:00 AM UTC on January 8, falling below the $100,000 mark, which has served as a psychological resistance since December 19, according to data from Cointelegraph Markets Pro.
1-month chart of the BTC/USD pair. Source: Cointelegraph
While the upcoming inauguration of elected President Donald Trump on January 20 is seen as positive for the crypto industry, delays in the implementation of cryptocurrency regulations could dampen investor sentiment and lower valuations.
However, the addition of $612 billion in new liquidity to the U.S. Treasury by March 2025 may counteract any regulatory disappointment, according to Arthur Hayes, co-founder of BitMEX. In a blog post on January 7, Hayes wrote:
"A disappointment from Team Trump in its pro-crypto and pro-business legislation proposal may be offset by an extremely positive dollar liquidity environment, an increase of up to $612 billion in the first quarter."
Initial balance of the general Treasury account (CGT). Source: Arthur Hayes/Substack
According to Hayes, money printing will accelerate after Trump's inauguration, leading to a local peak for Bitcoin in March before the start of a potential correction.
Hayes said that the correction will likely be driven by disappointment surrounding the Trump administration's lagging cryptocurrency policy.
"The market will instantly awaken to the reality that Trump has at best a year to enact any policy changes around January 20. This realization will lead to a massive sell-off of cryptocurrencies and other Trump 2.0 securities," Hayes wrote in a post on December 18.
Despite potential regulatory disappointment, analysts remain optimistic about Bitcoin's price trajectory, with some expecting a cycle peak above $150,000 by the end of 2025, driven by an expected $20 trillion increase in global money supply, which could attract $2 trillion in investment towards BTC.
Related: How Bitcoin at $100,000 affects the wealth gap in the digital age
Can Bitcoin recover $100,000 before Trump's inauguration?
The recent correction of Bitcoin has been attributed to lower activity from institutional investors during the holiday season.
However, institutional investors often redistribute capital at the beginning of the year. This institutional "liquidity boost" could help Bitcoin surpass $100,000 before Trump's inauguration on January 20, according to Binance Research:
"While it is possible for BTC to recover $100,000 before Trump's inauguration due to expectations of positive crypto regulation, the market will need to see ongoing supportive conditions to maintain such levels."
Related: China's growing debt represents a major buying opportunity for Bitcoin, according to Arthur Hayes
"Maintaining these levels long-term will depend on several factors, including the actual implementation of crypto regulations and the path of Federal Reserve policy in 2025," added Binance Research.
Institutional holders of Bitcoin remain optimistic ahead of Trump's inauguration. On January 7, KULR Technology Group, which is listed on the New York Stock Exchange, predicted that Bitcoin would exceed $200,000 in 2025 after the firm bought during the dip to $97,000.
