Featured image from YouTube, chart from TradingView.com<\/div>\n","protected":false},"excerpt":{"rendered":"
In a new essay published on Monday, Arthur Hayes\u2014renowned digital asset investor and former CEO of BitMEX\u2014contends that the crypto market is poised to rally strongly in the first quarter of 2025 before topping out sometime in \u201cmid to late March.\u201d Hayes\u2019s latest essay, titled \u201cSasa,\u201d delves deep into several macroeconomic variables, including US Federal Reserve (Fed) policy, US Treasury General Account (TGA) balances, the Fed\u2019s Reverse Repo Facility (RRP), and political uncertainty in Washington. Hayes began his essay by setting a vivid scene from Japan\u2019s Hokkaido ski resorts, likening dangerous backcountry conditions caused by insufficient snow cover over sharp bamboo grass (sasa) to potential market obstacles that could cut short crypto rallies. He observes that 2025 has kicked off amid robust snowfall in Hokkaido\u2014an apt metaphor for what he sees as a liquidity \u201cdumping\u201d that could propel digital asset prices upward. Nonetheless, he warns that the political and fiscal environment in the United States may introduce unexpected hazards. Why March Could Mark The Next Peak For Crypto \u201cAs we begin 2025, the question on crypto investors\u2019 minds is whether the Trump pump can continue,\u201d Hayes writes, referencing the initial optimism surrounding President Donald Trump\u2019s second term. While Hayes believes \u201cthe high expectations for policy action out of the Trump camp set up the market for disappointment,\u201d he maintains that any short-term negativity could be offset by a powerful \u201cdollar liquidity impulse.\u201d Related Reading: Crypto Trader Nets $17 Million From AI Coins: Here\u2019s What He\u2019s Buying Now Hayes underscores that the Fed\u2019s RRP has been critical for Bitcoin\u2019s price trajectory. Since the third quarter of 2022, the facility\u2019s unwinding has correlated positively with crypto and equities prices. \u201cBitcoin bottomed in Q3 2022 when the Fed\u2019s Reverse Repo Facility (RRP) reached its zenith,\u201d he explains, noting that US Treasury Secretary Janet \u201cBad Gurl\u201d Yellen facilitated a shift from issuing longer-dated coupon bonds to issuing shorter-dated T-bills. This approach, he argues, effectively drained more than $2 trillion from the RRP, injecting liquidity into global markets. Now, with the RRP falling to almost zero, the Fed has \u201cbelatedly changed the policy rate of the RRP\u201d to make it less attractive. Hayes points out that it still represents a potential $237 billion injection into markets once the remaining RRP funds move into higher-yielding Treasury bills. Meanwhile, ongoing quantitative tightening (QT) removes $60 billion per month, totaling $180 billion between January and March. Netting both factors yields a $57 billion injection over the quarter. Another major focus in Hayes\u2019s thesis is the Treasury General Account. As debt ceiling negotiations loom, the Treasury\u2019s inability to issue new debt means it can only cover expenses by spending down the TGA\u2014an action that releases liquidity. \u201cBecause the aggregate amount of debt cannot rise until the US Congress increases the debt ceiling, the Treasury can only spend funds from its checking account, the TGA,\u201d Hayes writes, noting that the balance stands at around $722 billion. Related Reading: This Week\u2019s Top Crypto Catalysts: What Investors Need To Watch He estimates that without a debt ceiling resolution, the TGA could be exhausted by May or June. For crypto markets, the crux of the matter is the timescale for a deal in Congress. The essay highlights Trump\u2019s narrow majority and the likelihood that Republicans who position themselves as fiscally conservative will not grant quick or easy consent. Democrats, Hayes adds, are unlikely to facilitate enabling more spending for a president they oppose\u2014further fueling legislative brinkmanship. According to Hayes\u2019s calculations, TGA drawdowns could release an additional $555 billion from January through March. If combined with the $57 billion net liquidity from the Fed\u2019s RRP and QT adjustments, total dollar liquidity could rise by as much as $612 billion in the first quarter. Hayes zeroes in on March as the critical juncture\u2014when this liquidity surge might begin to wane and expectations for new federal spending or pro-crypto legislation from the Trump administration may not materialize on schedule. \u201cI believe I answered the question I posed at the outset. That is, 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,\u201d he states, before concluding that peak liquidity could subside quickly once the market anticipates the debt ceiling\u2019s resolution and the subsequent refilling of the TGA. From a historical lens, Hayes cites Bitcoin\u2019s price action in 2024, which peaked in mid-March around $73,000, then drifted sideways and tumbled just before the April 15 tax deadline. The reasoning, he suggests, is straightforward: as soon as TGA spending has run its course, the net positive liquidity picture reverts to neutral or negative, leaving risk assets vulnerable. While Hayes acknowledges that Chinese credit expansion, Bank of Japan interest rate policies, and the Trump administration\u2019s potential dollar devaluation strategy against other major currencies or gold could upend his timeline, he trusts that RRP and TGA mechanics are reliable near-term gauges. Crucially, these twin sources of liquidity appear powerful enough to overshadow any disappointment about Trump\u2019s policies until at least the end of March. \u201cNone of these major macroeconomic issues can be known a priori, but I have confidence in the math behind how the RRP and TGA balances will change over time,\u201d he says, underscoring that the surging crypto and stock markets since late 2022 align with the massive drain in the RRP. Hayes concludes by suggesting that, historically, markets often provide significant selling opportunities in the first quarter. By springtime, investors might want to take profits and \u201cchill on the beach\u201d while waiting for improved liquidity conditions to re-emerge in the second half of the year. \u201cRight on schedule, just like almost every other year, it will be time to sell in the late stages of the first quarter,\u201d Hayes concludes. At press time, Bitcoin traded at $101,344. Featured image from YouTube, chart from TradingView.com<\/p>\n","protected":false},"author":571,"featured_media":627333,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3],"tags":[230,428,656,679,6664,25757,83482,14690],"class_list":["post-671906","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-arthur-hayes","tag-bitcoin","tag-bitcoin-news","tag-bitcoin-price","tag-crypto","tag-crypto-bull-run","tag-crypto-cycle","tag-crypto-news"],"acf":[],"yoast_head":"\n
Crypto Will Peak In Mid To Late March, Predicts Arthur Hayes<\/title>\n \n \n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n \n \n \n \n \n\t \n\t \n\t \n