BitMEX founder Arthur Hayes, in his latest article, used a ski resort in Hokkaido as a metaphor, comparing dollar liquidity to snow and the 'disappointment that high expectations for Trump's policies may bring' to bamboo leaves hidden under the snow, forecasting future trends in global investment markets, including Bitcoin.
Trump's policies are difficult to implement
Arthur Hayes pointed out that the market has high expectations for the Trump administration, especially for its pro-business and pro-crypto policy stance. Investors generally expect that Trump will quickly promote policies after taking office, including easing cryptocurrency regulations, reducing tax burdens, and supporting measures for U.S. economic growth.
However, Arthur Hayes believes that the speed and actual effects of these policies may fall far short of high market expectations, and the gap between expectations and reality could negatively impact market sentiment, leading to a market correction. In this context, whether dollar liquidity can cover the potential market disappointment brought by 'the speed and effects of Trump’s policies' will be a major influencing factor for trends in the first quarter of 2025.
Dollar liquidity can compensate
Arthur Hayes stated that after a comprehensive assessment of the liquidity policies of the Federal Reserve and the U.S. Treasury, it is expected to release $612 billion in liquidity in the first quarter, which will provide significant liquidity support to the cryptocurrency market, with Bitcoin expected to experience a strong upward trend.
When will the market peak?
In summary, the liquidity environment in the first quarter is favorable. Arthur Hayes recommends that investors increase their allocation to cryptocurrencies and risk assets, and further points out that his family office fund Maelstrom is optimistic about and has allocated investments in the 'decentralized science (DeSci) track,' such as BIO, VITA, ATH, GROW, PSY, CRYO, NEURON.
However, as the market enters the second quarter, it may peak and face adjustment risks. Therefore, after March 2025, Arthur Hayes recommends that investors gradually reduce risk exposure, awaiting further liquidity improvements in the third quarter.
CryptoQuant analysts issued the same warning
On the other hand, CryptoQuant analyst Crypto Dan also expressed in an article on January 6 that the bull market may reach a cyclical peak in the first quarter of 2025 or at the latest in the second quarter. Crypto Dan noted that, according to historical patterns, the market may have entered the late stage of the bull market.
Crypto Dan cited the realized market cap indicator of UTXO, showing that Bitcoin traded in the past month accounted for 36% of the total market cap. Although this figure is lower than the historical bull market peaks (which usually reach 50%-60% during the most severe market bubbles), the long-term trend indicates that this ratio has been continuously declining.
In past bull markets, this indicator (short-term trading ratio) typically surged sharply 2-4 times before market peaks, forming what is known as a 'market overheating' signal, and currently, this signal has begun to emerge.
Therefore, although the expectations for significant increases in Bitcoin and altcoins are still worth looking forward to, from a conservative perspective and considering risk management, it is still recommended to act cautiously.
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