Arthur Hayes believes that cryptocurrency will peak around mid-March in 2025 before experiencing a sharp correction.
“I believe crypto will peak in mid-March and then drastically correct.” “Until then, it’s time to dance,” he said on X on Tuesday.
Hayes stated that the Federal Reserve continues to tighten its quantitative policy at $60 billion per monthly. In his essay, Hayes explained that the Federal Reserve’s quantitative tightening policy continues at $60 billion per month.
He predicted that the crypto market would peak in late to mid-March, which equates to $180 billion of liquidity being removed due to the quantitative tightening between January and March.
The BitMEX founder noted that Bitcoin fell in 2022, when the Fed’s Reverse Repo Facility reached its peak.
He argued this was due to the U.S. Treasury secretary, Janet Yellen’s, decision to issue fewer longer-dated coupons bonds and more short-dated zero-coupon notes, draining $2 trillion from RRP.
“This is an injection of liquidity into global financial markets.” Hayes wrote that crypto and stocks, particularly US-listed large tech stocks, were ripped apart as a consequence.
He also argued that Treasury would use up its general account at the Fed to inject liquidity into the system. This would be a short-term bullish sign for Bitcoin.
Arthur Hayes predicts that the RRP will drop from $237 billion in the first quarter to zero as money market funds (MMFs) maximize their returns by purchasing higher-yielding Treasury Bills and withdrawing their funds.
He added, “This represents a $237 billion dollar injection of liquidity in the first three months.”
He also noted that the April tax deadlines would be a further negative factor for crypto. He believes that as a result the crypto market in general will undergo a massive corrective.
