Crypto Market to Experience Massive Correction, Arthur Hayes Predicts

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According to Arthur Hayes, the co-founder of BitMEX, it is predicted that the cryptocurrency market will reach its maximum point by March. Following this peak, a significant downturn or correction is expected to occur.

In 2022, Bitcoin‘s price appeared to hit a low point coincidentally when the Federal Reserve’s Reverse Repo Facility (RRP) peaked. This substantial influx of liquidity seems to have fueled the rise in both tech stocks and Bitcoin.

If the Treasury General Account (TGA) depletes, he suggests it could become challenging for the Fed to effectively control increasing bond yields.

Based on the analyst’s assessment, money market funds are projected to withdraw approximately $237 billion from the Reverse Repo Program (RRP) during the first quarter. This withdrawal will primarily be used to buy short-term government debt. This liquidity infusion could potentially be positive for Bitcoin in the near future.

The Treasury will have to spend down the TGA if Congress fails to raise the debt ceiling. 

It is expected that these two advancements will probably have a positive impact on Bitcoin’s price trend during the initial three months of the upcoming year.

Once the debt ceiling is increased by Congress, I will need to replenish the Treasury General Account (TGA). In simpler terms, this means that the Treasury will regain the ability to borrow money and will have to refill the TGA. This action may result in a decrease of dollar liquidity.

Tax deadlines will be another bearish headwind for Bitcoin in April. 

Therefore, according to Hayes, it’s expected that the cryptocurrency market may undergo a significant downturn because of the mentioned elements that are adversely impacting liquidity.

Previously, the CEO of BitMEX has also expressed his viewpoint that it’s crucial to consider additional aspects. Among these are the monetary policies enacted by countries like China and Japan.

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2025-01-07 09:15