Arthur Hayes, co-founder of BitMEX and chief investment officer of Maelstrom, said that despite political and policy uncertainty, the influx of dollar liquidity will help the market grow by mid-to-late March 2025. predicted that it could reach its peak.
Hayes noted that Federal Reserve and Treasury policy changes have injected a net $57 billion in liquidity through the first quarter.
Debt Ceiling and Treasury Strategy
In his latest blog post, Hayes said that although expectations for President-elect Donald Trump’s pro-crypto policies may disappoint the market, the reverse repo facility (RRP) and Treasury General Account (TGA) spending remain He argued that increased liquidity from the decline would support the market. Risk assets including Bitcoin (BTC).
According to Hayes,
“The Trump campaign’s disappointment with the pro-crypto and pro-business legislation could be offset by a very positive dollar liquidity environment.”
Hayes pointed out that the rise in Bitcoin is “inextricably linked to the depletion of RRP,” and that there is a direct correlation between the decline in RRP balances and the rise in the market for crypto and tech stocks. did.
He further explained that as the RRP nears depletion, $237 billion will flow into the market, offsetting the $180 billion in liquidity reductions from the Fed’s continued quantitative tightening.
Mr Hayes predicted market momentum would be maintained through March as the Treasury relies on the TGA due to the delay in the debt ceiling. The TGA is $722 billion, and Hayes expects spending to accelerate as the account is depleted by 76%, likely to spark market speculation ahead of a resolution to raise the debt ceiling.
While Hayes acknowledged that President Trump’s legislative delays could dampen enthusiasm, he believes the liquidity situation will be enough support to lift Bitcoin and stocks higher in the short term. insisted.
April correction
While Hayes sounded optimistic, he acknowledged risks related to global economic variables, including China’s credit policy and potential changes by the Bank of Japan. He also pointed to the April 15 US tax deadline as a key turning point and predicted a temporary downturn in the crypto market.
Hayes suggested that a similar trajectory could unfold in 2024, paralleling Bitcoin’s mid-March highs, including sideways trading and a decline after a liquidity spike. he said:
“As planned, much like any other year, it will be time to sell in the second half of the first quarter, relax on the beaches, monasteries and ski slopes of the Southern Hemisphere and wait for positive fiat currency.”Liquidity in the third quarter situation will arise again. ”
Finally, Hayes indicated that Maelstrom will increase its exposure to risk assets, including decentralized scientific tokens, as part of its Q1 strategy.
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