Cryptocurrency Market: March Peak, Fall to Come, According to Arthur Hayes
Date: 2025-01-08 Author: Oliver Abernathy Categories: CRYPTO PAYMENTS
Hayes attributes his findings to the dynamics of dollar liquidity, which affects the global financial system. The analysis is based on two components: the Federal Reserve’s reverse repo facility (RRP) and the US Treasury General Account (TGA). Hayes noted that since Bitcoin’s recovery in Q3 2022, its price has been closely correlated with the RRP, confirming the increase in liquidity.
In his latest essay, Hayes said that the main question for crypto investors in early 2025 is whether the market rally initiated by Donald Trump’s victory in the presidential election will continue.
Hayes previously predicted a market crash on January 20, 2025 — the day of the new president’s inauguration. He cited crypto investors’ disappointment in the Trump administration’s inability to quickly deliver on its promises to the crypto community as the reason. However, he has now abandoned these assumptions, citing sufficient liquidity in the market.
Despite the Fed’s monthly asset reduction of $60 billion, which will reduce liquidity by $180 billion by March, the RRP easing will add $237 billion in liquidity. This will offset the impact of tightening policy, Hayes claims.
In addition, the US Treasury Department intends to take emergency measures to support government operations in January. Such a move will temporarily reduce the Treasury’s general account, increasing available liquidity until the debt ceiling issue is resolved by Congress.
Hayes believes that these measures will create favorable conditions for the crypto market. He estimates that TGA could shrink by 76% by March 2025, which coincides with the expected market peak.
In addition to liquidity, Hayes warns of the possible impact of other macroeconomic factors, such as changes in China's credit policy, the Bank of Japan's actions, or unexpected decisions by the new US administration.
As part of his strategy, Hayes is increasing exposure to the Maelstrom fund, which is heavily invested in the DeSci (decentralized science) sector. Among the tokens acquired are BIO, VITA, ATH, GROW, PSY, CRYO, and NEURON.
Despite his optimism about the short-term dynamics, Hayes advises investors to remain cautious given the potential for unforeseen circumstances.
