The cryptocurrency market is abuzz with speculations following the recent predictions by Arthur Hayes, a prominent crypto entrepreneur and commentator. In a compelling blog post, Hayes anticipates that the influx of fresh liquidity into the US economy, coinciding with President-elect Donald Trump’s inauguration, could potentially trigger a Bitcoin (BTC) rally in the first quarter of 2025.
Will Monetary Policies Propel Bitcoin to New Heights?
Bitcoin made headlines by surpassing the $100,000 mark on January 6; however, it faced a sharp downturn, plummeting to $94,543 earlier today. This unexpected dip has cast doubt on the much-hyped “Trump rally” that many anticipated would persist until his inauguration on January 20.
Market Movements and Hayes’ Forecast
Recent market trends seem to resonate with Hayes’ earlier predictions from December. He had forewarned of a possible “harrowing dump” in the cryptocurrency landscape around the time of Trump’s inauguration. Hayes attributed this anticipated sell-off to potential regulatory letdowns from Trump’s incoming administration.
Nevertheless, in his latest insights, Hayes proposed that the US Federal Reserve’s strategy to infuse $612 billion of fresh liquidity into the economy might compensate for the anticipated regulatory shortcomings, fueling new bullish momentum for BTC. The BitMex co-founder stated:
“Team Trump’s potential failure to deliver on pro-crypto and pro-business legislation can be mitigated by a significantly positive dollar liquidity environment, with an increase of up to $612 billion expected in the first quarter.”
Hayes elaborated that the Fed’s anticipated acceleration of money printing following Trump’s inauguration could drive BTC and other digital assets to a local peak before a subsequent correction. He also mentioned that disappointment over delayed crypto regulation under Trump’s governance could intensify this pullback. The crypto aficionado suggested selling towards the end of Q1 2025 and awaiting favorable liquidity conditions to return in Q3 2025. As soon as new liquidity floods the market, Hayes advised that risk-seeking investors should “turn the risk dial to degen.”
A Divided Opinion on Bitcoin’s Price Trajectory
While Hayes is optimistic about a BTC rally later this quarter, other market analysts remain cautious. A recent report by 10x Research highlighted that the Federal Reserve’s delayed action in reducing interest rates might hinder BTC’s bullish momentum. Additionally, technical analysis indicates that BTC might be forming a bearish head-and-shoulders pattern on its weekly chart, sparking concerns of a potential drop to as low as $80,000. The inability to decisively reclaim the $100,000 price level yesterday has further unnerved bullish investors.
Contrasting these cautious views, the CEO of Bitcoin mining firm MARA has advocated for a long-term “invest and forget” approach to BTC. He proposed that the creation of a US strategic Bitcoin reserve could instigate a global race among nations to accumulate BTC, consequently driving up its price.
Institutional interest in BTC is already gaining momentum, as evidenced by record inflows received by US spot Bitcoin exchange-traded funds (ETFs). As of now, BTC is trading at $95,154, marking a 3.6% decrease in the past 24 hours.
With diverse opinions and predictions swirling around, the future of Bitcoin remains a topic of keen interest and speculation. Investors and market watchers will be closely monitoring how these economic and regulatory factors play out in the coming months.
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