Crypto Bulls Beware: Arthur Hayes Sees March as Turning Point

• A prominent personality in the crypto industry has predicted that the market could peak in March as the US could consider extreme measures to avoid hitting the debt ceiling.
• He also disclosed that the Bitcoin market bottomed in the third quarter of 2022 after the Federal Reserve Repo Facility (RRP) peaked. 

Bitcoin (BTC) has made a sudden u-turn to reclaim its $101k level after profit-taking actions and broad market liquidations forced the asset to find support at the $91k zone. According to our market data, BTC has printed a 9.8% gain on its weekly price chart, dragging its 90-day return to 62.7% and cementing its dominance at 56.26%.

Meanwhile, American businessman and CEO of BitMex, Arthur Hayes, believes that an upcoming correction would disrupt the current performance and force the broad market to find support at its lowest.

Contrary to several claims that the current bull market could run for an extended period, Hayes predicts that the market would peak in March. Fascinatingly, this appears to be the second consecutive bearish prediction by the BitMex CEO. As we detailed in our previous report, Hayes disclosed that there could be a “harrowing dump” around the inauguration of Donald Trump.

“Sasa” is an essay where I explain y I think #crypto tops out in mid-Mar and then severely corrects. Until then is time to dance. https://t.co/Apt124sOjp pic.twitter.com/LKQ24GMtpq— Arthur Hayes (@CryptoHayes) January 6, 2025

Reasons for the Upcoming Crypto Market Correction

According to Hayes, the US Federal Reserve is taking serious measures to improve the overall demand for the US Treasury debt issuance before “stopping quantitative tightening.” Hayes explained that the Bitcoin market bottomed in the third quarter of 2022 (Q3 2022). Within that period, the Federal Reserve Repo Facility (RRP) – a strategic short-term agreement where securities are sold to be bought back at a higher price, reached its highest point.

Source: Arthur Hayes

Explaining why the crypto market recorded steady growth from that time, the businessman stated that U.S. Treasury Secretary Janet Yellen floated a few longer-dated coupon bonds and many of the shorter-dated zero coupon bills, exhausting $2 trillion from the RRP. Economically, this resulted in high liquidity injection in the global financial markets.

Further explaining his position, the BitMex CEO disclosed that the first quarter of 2025 (Q1 2025) could see the RRP reducing from around $237 billion to zero. His reason is based on the possible maximization of yield by the Money Market Funds (MMF). From the perspective of common trend, funds would be significantly withdrawn for higher yield Treasury Bill (T-Bill) purchases. Per his observation, $180 billion of liquidity would likely be removed.

The Debt Ceiling Problem

Recently, Treasury Secretary Janet Yellen highlighted that the country will need to consider “extraordinary measures” to avoid breaching the debt ceiling. Fascinatingly, Hayes believes that the Treasury would either have to issue debt or spend money from its checking account ($722 billion balance). Per his analysis, the Treasury would choose the latter option since it cannot afford to push the level of debt up until the debt ceiling is adjusted.

Hayes also highlighted that the pace of the Treasury General Account (TGA) usage would provide a clear overview of when the drawdown would be extremely felt. According to him, the crypto market would have to explore other avenues for liquidity, but before that, there could be a 76% depletion.

Contrary to this, other experts and institutions tip an extended period for this bull cycle. As we recently highlighted in a report, a Steno Research analysis expects an improved regulatory environment and macroeconomic basics to sustain the market, pushing Bitcoin to $150k and Ethereum (ETH) to $8000.