Crypto Will Peak In Mid To Late March, Predicts Arthur Hayes
in a new prose Arthur Hayes, a well-known digital asset investor and former CEO of BitMEX, believes in an article published on Monday that the cryptocurrency market is expected to rebound strongly in the first quarter of 2025 before peaking sometime in “mid-to-late March.” Hayes’ latest article, titled “Sasa,” delves into several macroeconomic variables, including Federal Reserve (Fed) policy, the U.S. Treasury General Account (TGA) balance, the Fed’s Reverse Repurchase Facility (RRP), and politics in Washington Uncertainty.
Hayes began his article with a vivid scene from Japan’s Hokkaido ski resort, likening the dangerous backcountry conditions caused by a lack of snow on sharp bamboo grass (sasa) to potential market hurdles that could short-circuit the cryptocurrency’s rally. He observed that 2025 kicked off amid heavy snowfall in Hokkaido — an apt metaphor for the liquidity “dumping” that he believed could drive digital asset prices higher. Still, he warned that the U.S. political and fiscal environment could pose unexpected dangers.
Why March could mark crypto’s next peak
“As 2025 begins, the question on crypto investors’ minds is whether the Trump boost can continue,” Hayes wrote, referring to the initial optimism surrounding the president. Donald Trump’s second term. While Hayes believes that “high expectations for policy actions from the Trump camp have led to market disappointment,” he insists that any short-term negative sentiment is likely to be offset by a strong “dollar liquidity impulse.”
Related reading
Hayes emphasized that the Fed’s suggested retail price is critical to Bitcoin’s price trajectory. Since the third quarter of 2022, the instrument’s unwinding has been positively correlated with cryptocurrency and stock prices.
“Bitcoin bottomed in Q3 2022 when the Fed Reverse Repo Facility (RRP) He explained that U.S. Treasury Secretary Janet “Bud Gur” Yellen drove the shift from issuing longer-term coupon bonds to issuing shorter-term Treasury bills. He believes that this approach has actually removed more than $2 trillion from RRP and injected liquidity into global markets.
Now, with the RRP falling to almost zero, the Fed has “belatedly changed the policy rate on the RRP,” making it less attractive. Hayes pointed out that once the remaining RRP funds are transferred to higher-yielding Treasuries, this still means that $237 billion may be injected into the market. At the same time, ongoing Quantitative tightening (QT) The monthly decrease was $60 billion, for a total decrease of $180 billion between January and March. After excluding these two factors, $57 billion will be injected this quarter.
Another major focus of Hayes’ paper is the Treasury General Account. With debt ceiling talks looming, the Treasury is unable to issue new debt, meaning it can only pay for expenses through the TGA, a move that could free up liquidity.
“The total debt will not rise until Congress raises the debt ceiling, so the Treasury Department can only spend money from its checking account, TGA,” Hayes wrote, noting that the balance is about $722 billion.
Related reading
He estimated that without a debt ceiling resolution, the TGA could be exhausted in May or June. A key issue for the cryptocurrency market is the timeline for Congress to reach an agreement. The article highlights Trump’s slim majority and the likelihood that Republicans who position themselves as fiscal conservatives won’t agree quickly or easily. Hayes added that Democrats are unlikely to provide more spending for a president they oppose, further fueling legislative brinksmanship.
According to Hayes’ calculations, TGA withdrawals could free up an additional $555 billion from January to March. If combined with the $57 billion in net liquidity brought about by the Fed’s RRP and QT adjustments, total U.S. dollar liquidity in the first quarter could increase by as much as $612 billion.
Hayes identified March as a critical moment when the surge in liquidity could begin to wane and the Trump administration’s expectations for new federal spending or pro-cryptocurrency legislation may not materialize as planned.
“I believe I answered the question I asked at the outset. That is, the Trump team’s disappointment with its proposed pro-cryptocurrency and pro-business legislation can be made up for by an extremely positive USD liquidity environment,” he said, It then concludes that once the market anticipates a peak in liquidity it may quickly subside. Debt ceiling resolution and subsequent additions to the TGA.
From a historical perspective, Hayes cited Bitcoin price action in 2024, which peaked around $73,000 in mid-March before trading sideways and plummeting ahead of the April 15 tax deadline. The reason, he believes, is simple: Once TGA spending ends, net positive liquidity conditions return to neutral or negative, leaving risk assets vulnerable.
While Hayes acknowledges that Chinese credit expansion, Bank of Japan interest rate policy and the Trump administration’s potential dollar devaluation strategy against other major currencies or gold could upend his timetable, he believes the RRP and TGA mechanisms are reliable near-term indicators. Crucially, both sources of liquidity appear strong enough to mask any disappointment with Trump’s policies, at least until the end of March.
“None of these big macroeconomic issues can be known in advance, but I am confident in the math behind how the RRP and TGA balances will change over time,” he said. He highlighted the surge in cryptocurrencies and stocks since late 2022 Massive consumption in the market and RRP.
Hayes concluded that historically, markets tend to provide significant selling opportunities in the first quarter. Come spring, investors may want to take profits and “relax on the beach” while waiting for improved liquidity conditions to return in the second half of the year. “As in almost every year, the end of the first quarter is the time to sell,” Hayes concluded.
At press time, Bitcoin was trading at $101,344.
Featured image from YouTube, chart from TradingView.com
