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 states that previously in the third quarter of 2022, Bitcoin hit a bottom when the Federal Reserve's reverse repo tool peaked; Yellen adjusted the bond strategy, withdrawing over $2 trillion from RRP to inject liquidity into the market, driving cryptocurrencies and stocks to soar. In the first quarter of 2025, the market will focus on whether the dollar liquidity can offset the impact of the slow implementation of Trump’s policies. If liquidity is sufficient, increasing risk exposure will be a safe choice. The Federal Reserve factor is secondary in the analysis, with a focus on how the Treasury responds 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 nearing zero, and the RRP interest rate is lowered to reduce attractiveness. This move aims to boost demand for U.S. Treasuries and pave the way for stopping QT and other policies. Yellen revealed that the Treasury expects to take "extraordinary measures" to raise funds by mid-January. When will politicians agree to raise the debt ceiling? This tests 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 dollar liquidity from the Federal Reserve and the Treasury is expected to be $612 billion. As the default and shutdown crisis approaches, an agreement will be reached to raise the debt ceiling, the Treasury will 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 decline. If the TGA balance dominates cryptocurrency prices, the market may hit a peak by the end of the first quarter and then fall back. Yellen lowered the interest rate for issuing short-term Treasury bills, which caused Powell's strategy of tightening monetary conditions to combat inflation to fail. 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 recommend risk-takers shift to aggressive mode and venture into decentralized science (DeSci) altcoin territory. If things go smoothly, I will reduce baseline positions in March."