- Arthur Hayes returns with an essay packed with bold opinions, humor, and keen observations.
- Earlier, Hayes suggested the Trump administration’s Web3 policies might disappoint the crypto crowd.
- In his latest post, “Sasa”, Hayes anticipates a market surge in early 2025 fueled by increased US dollar liquidity.
- He points to the Reserve Repo Facility and Treasury General Account as major sources of this liquidity boost, predicting a bullish phase for crypto markets.
BitMEX and Maelstrom founder Arthur Hayes is back with his latest essay – and as you’d expect, it’s a whirlwind read brimming with controversy, laughs and unique insights.
Before we dive into the lengthy (and trust me, in today’s social media brain-addled era, it is lengthy) piece, we must first interrogate Hayes’ previous positions on the crypto bull market.
His prior article, Trump Truth, argued that the Trump administration may underwhelm the crypto community with its Web3 policy changes. Whether his party’s fault, or resistance from the Senate – Hayes believed that the reality of crypto under Trump wouldn’t be as revolutionary as some hoped.
And when that became clear, the market would dump crypto like 2022 all over again.
However, Hayes’ latest Medium post, Sasa, foretells a less grim future.
So what’s with Hayes’ change of heart?
Related: Ripple CEO Hints at Bullish 2025, Says Team Trump About to ‘Jumpstart’ Crypto
US Dollar Liquidity and Its Impact on the Crypto Sphere
It’s all about US Dollar liquidity baby.
Simply, generally, and without any depth: liquidity = crypto price go brrrr.
Hayes believes that at the start of 2025, a wave of cash will enter investors’ (institutional, particularly) hands, leading to a market boom.
A major reason for this, according to Hayes, is the Reserve Repo Facility.
This facility, called the RRP, allows big financial players to park their cash with the Feds in exchange for Treasury securities. Hayes believes these institutions will chase bigger returns (through instruments like short-term T-Bills and crypto) – leading to greater investor liquidity. Additionally, low RRP balances have historically coincided with Bitcoin’s price increasing.
Bitcoin bottomed in Q3 2022 when the Fed’s Reverse Repo Facility (RRP) reached its zenith. At the behest of Bad Gurl Yellen, the US Treasury Secretary, her department issued fewer longer-dated coupon bonds and more shorter-dated zero-coupon bills, which drained over $2 trillion from the RRP. This is a liquidity injection into the global financial markets. Crypto and stonks, especially US-listed big tech stocks, ripped as a result.
Arthur Hayes, BitMEX founderHayes also predicts that the Treasury General Account will pump US $375b (AU $601b) into the economy to fund government spending.
All up, he believes US $612b (AU $981b) will be injected into US liquidity through 2025’s first quarter.
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, an increase of up to $612 billion in the first quarter.
Arthur Hayes, BitMEX founderBull Market Top Coming for April 2025, Hayes Predicts
Like all bull markets, this won’t last forever, and Hayes suggests the market will see its top in March-April, before macroeconomic factors combine with disappointment in Trump to cause a crypto pullback.
I’m sure you’ve heard this before, but here we go again – the economy works in a cycle. Periods of heightened liquidity are inevitably matched by a tightening of the wallet (by consumers, governments and institutions).
Several factors play into Hayes’ prediction of an April top:
- Tax time. April 15th is the deadline for submitting tax returns in the United States – so naturally, businesses have less cash flow around then.
- TGA Replenishment. While the TGA will pump a lot of money into the economy in 2025’s Q1, they will inevitably reach their debt ceiling. Once this happens, they must issue new debt, removing liquidity from the market.
Hayes also notes global factors like the Bank of Japan increasing interest rates could have a major impact on pre-empting a market top.
We all saw what happened when Japan unwinded billions of carry trades, causing a mass exodus in stocks and crypto.
If they do it again, will the results be quite so calamitous?
Related: Bitcoin, Solana, Ethereum Tumble: Here’s Why Crypto Markets Are Down Today
Well yes, because the markets can’t help but overreact in the short-term. They are at the mercy of humans, after all.
But what about the long term?
As Hayes says, “none of these major macroeconomic issues can be known a priori…”. What he does know for sure is “the dollar liquidity increase, due to the decline of the RRP balance directly resulted in the ramp in crypto and stocks”.
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