BitMEX co-founder Arthur Hayes has suggested that Bitcoin could reach a new peak by late Q1, driven by current U.S. Federal Reserve economic policies.
Economic Policy and Arthur Hayes' Predictions
In an essay published on January 7, Hayes looked at potential impacts on risk assets, including Bitcoin, from Federal Reserve's quantitative tightening and liquidity measures. The Federal Reserve is expected to withdraw $180 billion from the economy through quantitative tightening between January and March. However, changes to the Reverse Repo Program rate could inject $237 billion, leading to a net liquidity increase of $57 billion for Q1.
Impact of Liquidity Changes on the Market
Hayes anticipates liquidity shifts will drive a market rally, with Bitcoin potentially peaking in mid to late March 2024, reaching around $73,000. However, after Q1, the market may experience pressure due to tax obligations and the replenishment of the Treasury's general account. He speculates the Fed might run out of policy tools, halting QT or resuming easing.
Political Prospects and Cryptocurrencies
In an interview with Channel News Asia, Hayes expressed doubt about former President Trump's support for Bitcoin, highlighting the absence of pro-crypto policies during his administration. He suggested that Trump's potential re-election in 2025 might not lead to favorable regulations for Bitcoin, as their economic policies could increase U.S. debt and inflation, making Bitcoin and cryptocurrencies more attractive as alternative assets.
Arthur Hayes believes that current shifts in economic policy and liquidity could lead to a short-term peak in Bitcoin by early 2024, but further developments heavily depend on future Federal Reserve policy and the political landscape.
