BitMEX co-founder and Maelstrom chief investment officer Arthur Hayes predicted that markets would potentially peak by mid-to-late March 2025, driven by an influx of dollar liquidity despite political and policy uncertainties.
Hayes pointed to a net injection of $57 billion in liquidity through the first quarter, driven by shifts in Federal Reserve and US Treasury policies.
Debt ceiling and Treasury strategy
In his latest blog post, Hayes argued that while expectations for pro-crypto policies from President-elect Donald Trump could lead to market disappointment, the liquidity boost from a dwindling Reverse Repo Facility (RRP) and Treasury General Account (TGA) spending would support risk assets, including Bitcoin (BTC).
According to Hayes:
“The sasa of a letdown by team Trump on his proposed pro-crypto and pro-business legislation can be covered by an extremely positive dollar liquidity environment.”
Hayes noted that Bitcoin’s rise has been “closely tied to the depletion of the RRP,” and there is a direct correlation between reduced RRP balances and market rallies in crypto and tech stocks.
He further explained that as the RRP nears depletion, $237 billion will flow into the markets, offsetting $180 billion in liquidity reductions from the Fed’s ongoing quantitative tightening.
Hayes forecasted that the Treasury’s reliance on its TGA amid debt ceiling delays would sustain market momentum until March. With the TGA standing at $722 billion, Hayes expects spending to accelerate as the account depletes by 76%, likely triggering market speculation ahead of a resolution to raise the debt ceiling.
While Hayes acknowledged that delays in Trump’s legislative agenda could dampen enthusiasm, he maintained that liquidity conditions would provide enough support to propel Bitcoin and equities higher in the short term.
April correction
Despite his optimism, Hayes acknowledged risks tied to global economic variables, including China’s credit policies and potential shifts by the Bank of Japan. He also flagged April 15, the US tax payment deadline, as a key turning point, predicting a temporary downturn in crypto markets.
Drawing parallels to Bitcoin’s mid-March peak in 2024, Hayes suggested a similar trajectory could unfold, with sideways trading or declines following the liquidity surge. He said:
“Right on schedule, just like almost every other year, it will be time to sell in the late stages of the first quarter and chill on the beach, at the clerb, or on a ski resort in the southern hemisphere and wait for positive fiat liquidity conditions to re-emerge in the third quarter.”
Hayes concluded by signaling that Maelstrom would increase its exposure to risk assets, including decentralized science tokens, as part of its first-quarter strategy.
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