Crypto Market Expected to Rally Strongly in Q1 2025
Arthur Hayes, former CEO of BitMEX, forecasts a strong rally in the crypto market during the first quarter of 2025, peaking around mid to late March. His analysis focuses on macroeconomic factors such as US Federal Reserve policy, Treasury General Account (TGA) balances, and political uncertainty.
Key points:
- Hayes likens current market conditions to risky skiing in Japan due to potential obstacles.
- He sees robust liquidity from a $237 billion potential injection from the Fed’s Reverse Repo Facility (RRP).
- Ongoing quantitative tightening (QT) could offset this with a net $57 billion reduction in liquidity.
- The TGA balance, currently at approximately $722 billion, may be depleted by May or June without a debt ceiling resolution.
- Hayes estimates that TGA drawdowns could release an additional $555 billion from January to March.
- Combined, these factors could lead to a total liquidity increase of up to $612 billion in Q1.
- March is highlighted as critical when this liquidity surge may wane, potentially leading to disappointment regarding expected pro-crypto policies from the Trump administration.
- Historical patterns suggest significant selling opportunities often arise in the first quarter, with a recommendation to consider profit-taking before spring.
Current Bitcoin price stands at $101,344.
