In accordance with Arthur Hayes, the Co-Founder of BitMEX and Chief Investment Officer at crypto VC Maelstrom, Bitcoin [BTC] and the overall cryptocurrency market may enact a similar pattern to 2024, culminating in a peak in March followed by an extended correction.
Hayes attributes the anticipated local high in March to the Federal Reserve’s continuing quantitative tightening (QT) and the arrival of tax season in early April. He expressed concerns that these factors could have a negative impact on US liquidity, leading to a slowdown in risk-on assets like BTC. In his most recent blog post, he mentioned,
“I anticipate the market reaching its peak in mid to late March, resulting in a removal of liquidity worth $180 billion due to QT from January to March.”
Concerns Over US Debt Ceiling
Hayes also highlighted another potential risk factor, the US debt ceiling, currently set at $31.5 trillion unless Congress decides to raise it. If an increase is approved, the US Treasury might borrow further funds, consequently draining additional market liquidity. Hayes elaborated stating,
“When default and shutdown appear imminent, an eleventh-hour agreement will likely be struck, resulting in a debt ceiling increase. Subsequently, the Treasury will be able to borrow on a net basis once again, needing to replenish the TGA. This will have a negative impact on dollar liquidity.”
He pointed out that the US tax season commencing on April 15th might further impact the money supply, potentially placing risk-on assets under pressure. QCP Capital, analysts at a crypto options trading desk, voiced comparable apprehension, emphasizing that the US debt ceiling debate could provoke market turbulence.
In a recent Telegram broadcast, the firm emphasized,
“The road ahead into January may not be smooth as structural risks loom large. The anticipated reinstatement of the U.S. Treasury debt ceiling in mid-month will require extraordinary measures to sustain government expenses, possibly stirring market volatility amidst escalating discussions.”
These macro risks could potentially overshadow the optimistic outlook for BTC in January.
After a two-week hiatus, the cryptocurrency resurged above $100K, signaling renewed confidence in advance of Donald Trump’s presidential inauguration scheduled for January 20th.
According to Bitcoindata21, a pseudonymous on-chain analyst, a certain metric was on the brink of triggering a euphoria sell signal.