Arthur Hayes Predicts Bitcoin and Crypto Market Peak by March, Followed by Crash

BitMEX co-founder Arthur Hayes forecasts that Bitcoin and the crypto market will reach their peak before mid-2025, followed by a significant correction. His prediction hinges on the U.S. dollar liquidity dynamics expected to unfold in Q1 2025 as Donald Trump assumes office on January 20.

Bitcoin and Crypto Market In Early 2025

BitMEX co-founder Arthur Hayes expects a crypto market rally will last until Q1 2025, as per a new blog on January 7. He cites a pro-business environment and pro-crypto policies as Donald Trump takes charge, which will continue to drive Bitcoin and other crypto assets higher. However, he also warned about a potential crash ahead for the market once it hits its peak in around March.

Notably, he stresses that the US Dollar liquidity will continue to drive optimism in crypto. Hayes believes that recent policy shifts, particularly from the U.S. Federal Reserve and the Treasury Department, will influence Bitcoin price trajectory.

Similar to the peak of the Fed’s Reverse Repo Facility (RRP) in Q3 2022, global liquidity saw a surge. Also, BTC found its bottom and reversed its trajectory since then. Hayes predicts that the Fed will continue its quantitative tightening (QT) at a pace of $60 billion per month until mid-2025. This will reduce liquidity in the financial system. This, along with the recent decision to adjust RRP rates, will likely cause liquidity levels to fall sharply in the first quarter of 2025.

However, it won’t be a matter of major concern says Hayes as he believes that other sources of liquidity will offset this concern. He added that the U.S. Treasury through its General Treasury Account (TGA) would inject liquidity into the market by spending funds rather than issuing debt, especially if the debt ceiling is raised in time.

Hayes predicts a net injection of $612 billion in US Dollar liquidity by the end of March 2025. If this happens, it will provide a significant boost to Bitcoin as well as the broader crypto market. He said that it will be interesting to see whether Trump’s political clout will allow for a timely resolution of the debt ceiling situation.

If the Treasury successfully navigates the debt ceiling issue and injects liquidity into the market, it could propel crypto assets, including Bitcoin, through the first quarter of 2025. Hayes recommends that investors remain bullish on the crypto market, suggesting the first quarter could offer a significant upside.

A Corrective Phase After Q1 2025

As per Arthur Hayes, the bullish phase may not last after Q1 2025 as liquidity conditions tighten and the Trump pump buzz fades away. Thus, he expects the market to enter a corrective phase after the first quarter. With both fiscal and monetary support waning, Bitcoin and the entire crypto market could face significant pullbacks, he said.

Additionally, tax season — with payments due in mid-April — will further deplete the TGA and create a liquidity squeeze. This might further dampen the investment sentiment, per Hayes. Arthur Hayes anticipates that this correction may manifest as a pullback similar to the one BTC experienced in mid-2024, following its local highs earlier in the year.

“In 2024, Bitcoin hit a local high of ~$73,000 in mid-March, then traded sideways, and began its multi-month decline on April 11th right before the 15th tax payment deadline.”

As Hayes remains optimistic for Q1 2025, he announced that his firm Maelstorm plans to shift into “DEGEN mode,” opting to invest in emerging decentralized science (DeSci) projects. His portfolio includes tokens such as BIO, VITA, ATH, GROW, PSY, CRYO, and NEURON.

The Bitcoin price is showing strength currently extending its weekly gains to more than 10% and is currently trading past $102,000. Amid this recent surge, the 24-hour total liquidation has shot up to $58 million of which $47 million is in short liquidation, per the Coinglass data. Also, the open interest is up by 4% highlighting optimism among futures traders.