BitMEX’s Hayes predicts Bitcoin to peak soon as Fed’s tools near exhaustion

BitMEX co-founder Arthur Hayes says the Federal Reserve’s quantitative tightening and liquidity measures could push Bitcoin to a peak in the late first quarter.

In his latest article dated January 7, BitMEX co-founder Arthur Hayes predicted that Bitcoin (BTC) would peak in late March, noting the Fed’s difficulties in keeping the market stable while withdrawing $180 billion through quantitative tightening from January to March. .

At the same time, a change in the Reverse Repo Program rate would add $237 billion in liquidity, Hayes said, explaining that the money would flow into higher-yielding Treasury bills, resulting in a net liquidity injection of $57 billion in the first quarter.

The Treasury General Account will also play a role. “Bad Gurl Yellen” (Hayes’s name for Treasury Secretary Janet Yellen) began “extraordinary measures” to fund the government while waiting for Congress to raise the debt ceiling. Until then the Treasury will only be able to spend from the NPL, which Hayes predicts will be depleted in May or June. This spending adds liquidity to the market, but when the ceiling rises, the Treasury will need to replenish its account and withdraw liquidity.

Hayes believes the market will react to these liquidity changes. He predicts that Bitcoin and the entire market will peak in “mid to late March,” similar to March 2024 when Bitcoin peaked around $73,000. Going forward, the market may face headwinds from tax deadlines and TGA renewal.

The BitMEX co-founder believes the Fed has “exhausted all the tools at its disposal” and adds that future moves could include halting QT or even restarting quantitative easing. For now, Hayes says, liquidity conditions in the first quarter point to a temporary uptick for risky assets like Bitcoin.