According to BitMEX co-founder Arthur Hayes, the tightening of quantitative policies by the Federal Reserve and their adjustments in liquidity might push Bitcoin to reach its highest point towards the end of Q1 (First Quarter).
In his recent essay on January 7th, Arthur Hayes, co-founder of BitMEX, forecasts that Bitcoin (BTC) may reach its highest point by late March. He emphasizes the difficulties the Federal Reserve faces in maintaining market equilibrium as they withdraw $180 billion between January and March via quantitative tightening.
Concurrently, adjusting the Reverse Repo Program rate is projected to infuse approximately $237 billion in liquidity, as Hayes explains. This influx of money will predominantly move towards higher-yielding Treasury bills, thereby causing a net liquidity injection of around $57 billion during Q1.
The role of the U.S. Treasury’s General Account (TGA) will also be significant. Nicknamed “Bad Gurl Yellen” for Janet Yellen, the Treasury Secretary, has initiated special actions to finance the government until Congress increases the debt ceiling. During this period, the Treasury can only use funds from the TGA, a resource Hayes anticipates will run out by May or June. This spending injects liquidity into the market. However, once the debt ceiling is raised, the Treasury will have to replenish its account, which may withdraw liquidity.
According to Hayes’ perspective, the market is anticipated to adjust due to these liquidity changes. He anticipates both Bitcoin and the broader market to reach their maximum in the middle to latter half of March, which mirrors the peak observed in March 2024 when Bitcoin was approximately $73,000. Following this potential high point, the market could encounter resistance from tax filing deadlines and TGA replenishment efforts.
The co-founder of BitMEX thinks the Federal Reserve has used up all available strategies, potentially leading to actions such as halting Quantitative Tightening or reintroducing Quantitative Easing. For the moment, Hayes suggests that liquidity in Q1 may provide a short-term advantage for riskier assets like Bitcoin.
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2025-01-07 11:09