Former CEO of the cryptocurrency exchange BitMEX and well-known entrepreneur Arthur Hayes believes that the peak of the cryptocurrency market will occur in mid-March 2025, followed by a significant correction.
“I think the crypto market will reach its peak in mid-March, then plummet sharply,” – he wrote in his new essay.
Hayes explained that the policy of quantitative tightening by the U.S. Federal Reserve continues at a rate of $60 billion per month. This means a reduction in the Fed’s balance sheet, which, according to him, affects liquidity. His forecast for the peak of the crypto market in mid to late March corresponds to the withdrawal of $180 billion in liquidity due to quantitative tightening from January to March.
Hayes also recalled that in 2022, Bitcoin fell significantly when the Federal Reserve’s RRP fund reached its peak. This occurred after the U.S. Treasury decided to issue fewer long-term bonds and more short-term bills, leading to the withdrawal of over $2 trillion from the reserve RRP fund.
“This meant an injection of liquidity into the global financial markets. Cryptocurrencies and stocks, especially large tech companies, surged as a result,” – Hayes wrote.
He also speculated that the Treasury would spend the remnants of its general account at the Fed (TGA), which would lead to additional liquidity injection. Such a move would be a positive signal for Bitcoin in the short term.
According to Hayes, the reserve RRP fund could shrink from ~$237 billion to zero in the first quarter of 2025, as money market funds (MMF) withdraw funds to purchase high-paying treasury bonds.
“This means an injection of $237 billion of liquidity in the first quarter,” – he added.
But tax deadlines in April will be another negative factor for the crypto market. As a result, he expects a significant market correction after reaching the peak.
Similar views were expressed by analysts at CryptoQuant. According to their data, the “bullish” cycle that began in January 2023 brought significant growth both in duration and in the price of Bitcoin. They speculated that thanks to significant influx of new investments and additional contributions from investors, the market is approaching peak values of the current cycle.
It should be noted that the percentage of Bitcoin that traded for less than a month (based on realized market capitalization – UTXO) reached 36%. While this value is significantly lower than peak values of past cycles, the long-term downward trend suggests the likelihood of reaching the peak in the 1st or 2nd quarter of 2025.
However, instead of a one-time jump, this indicator may increase 2-4 times, which usually leads to significant overheating of the market, and then – to a “bearish” cycle.