Bitcoin, Crypto Market To Peak By March Followed By Crash, Predicts Arthur Hayes

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Arthur Hayes, one of BitMEX’s co-founders, anticipates that the Bitcoin and cryptocurrency market will reach its highest point before mid-2025, followed by a significant decline. This prediction is grounded in his analysis of the US dollar liquidity scenario anticipated to unfold during Q1 2025, when Donald Trump resumes his presidency on January 20.

Bitcoin and Crypto Market In Early 2025

Arthur Hayes, co-founder of BitMEX, predicts that the surge in the cryptocurrency market will persist until the first quarter of 2025, as mentioned in his latest blog post on January 7th. He attributes this optimism to a favorable business climate and crypto-friendly policies under the leadership of Donald Trump, which are likely to boost Bitcoin and other digital assets further. However, Hayes also issues a cautionary note about an impending market correction, possibly occurring around March when the market reaches its peak.

Sasa” – My Prediction for Why Cryptocurrency Peaks in Mid-March and Corrects Severely Thereafter

Currently, it’s a time to celebrate as I believe that the cryptocurrency market will reach its peak around mid-March. However, after this point, a significant correction is expected. So let’s enjoy the dance while we can!

— Arthur Hayes (@CryptoHayes) January 6, 2025

Significantly, Hayes underscores his conviction that ongoing USD liquidity will sustain optimism in the cryptocurrency sector. He posits that recent changes in monetary policy, notably by the U.S. Federal Reserve and the Treasury Department, are likely to impact Bitcoin’s price trend.

In a manner similar to the high point of the Federal Reserve’s Reverse Repo Facility (RRP) in Q3 of 2022, global liquidity experienced a significant increase. Moreover, Bitcoin seems to have reached its lowest point and has been moving upward ever since. Hayes anticipates that the Fed will continue with quantitative tightening (QT) at a rate of $60 billion per month until mid-2025. This process is expected to decrease liquidity within the financial system. Alongside recent modifications to RRP rates, this decrease in liquidity could lead to a steep drop in levels during the first quarter of 2025.

Nevertheless, Hayes assures us that this issue won’t pose a significant problem, as he trusts other funding sources can address it. He further noted that the U.S. Treasury, through its General Treasury Account (TGA), can inject liquidity into the market by spending money instead of borrowing more, especially if they manage to raise the debt ceiling in time.

By the end of March 2025, Hayes anticipates an injection of approximately $612 billion into the global liquidity pool in US Dollars. This could potentially spur growth not only in Bitcoin but also across the broader cryptocurrency market. It remains intriguing to observe whether Trump’s political influence might lead to a swift resolution regarding the debt ceiling issue.

Should the Treasury effectively handle the debt ceiling dilemma and introduce more funds into the financial system, it might spur the growth of cryptocurrencies, such as Bitcoin, throughout the first three months of 2025. Hayes advises investors to stay optimistic about the crypto market, hinting that the initial quarter may present substantial returns.

A Corrective Phase After Q1 2025

According to Arthur Hayes, the bullish trend might end after Q1 2025 as liquidity becomes more restricted and the impact of the “Trump pump” diminishes. He predicts that the market will then transition into a phase of correction. With both fiscal and monetary support decreasing, Bitcoin and the entire cryptocurrency market could experience substantial drops, Hayes stated.

Beyond this, the tax season approaching (with payments typically due around mid-April) is expected to drain the TGA even more and potentially create a cash crunch. This could negatively impact investor confidence, as suggested by Hayes. Hayes predicts that this situation might lead to a pullback similar to Bitcoin’s in mid-2024, which followed its high points earlier in the year.

In March of 2024, Bitcoin reached an all-time high of approximately $73,000. However, instead of continuing to rise, it stabilized for a while and then started a prolonged drop on April 11th, just before the due date for tax payments in mid-April.

In a positive outlook for Q1 2025, Hayes revealed that his company Maelstorm intends to transition into an aggressive investment phase, which he referred to as “DEGEN mode.” This move will see them investing in burgeoning decentralized science (DeSci) initiatives. His investment portfolio encompasses tokens like BIO, VITA, ATH, GROW, PSY, CRYO, and NEURON.

At present, the value of Bitcoin is exhibiting robust growth, surpassing its weekly increase by over 10%. It’s now trading above $102,000. This recent spike in price has led to a significant jump in total liquidation within the last 24 hours, amounting to approximately $58 million. Noteworthy here is that around $47 million of this figure represents short liquidations, as indicated by Coinglass data. Moreover, the open interest has risen by 4%, suggesting a positive outlook among futures traders.

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2025-01-07 09:36