Arthur Hayes, BitMEX co-founder, predicts that Bitcoin will first hit $110k before sliding back to $76.5k, suggesting that the first surge could result from the Fed’s printing of money, switching from quantitative tightening to quantitative easing. Hayes predicts that the Fed’s actions will have bullish effects for the short term, but a pullback mid-year could be an opportunity for spot traders to capture a low, before continuing a bull market to a high in March 2025.
Hayes reasons that the shift from quantitative tightening to easing, regarding U.S. treasuries, will have a direct effect on Bitcoin, but adds that tariffs are irrelevant due to transitory inflation. The Federal Reserve has kept interest rates steady at 4.25% to 4.50%. Jerome Powell, chairman of the Fed, raised the controversial term “transitory” to describe tariffs and their inflationary effects. He further announced, with relevance for Hayes’ prediction, that quantitative tightening would be rolled back in April, reducing securities redemption caps from $25 billion to $5 billion monthly.
Quantitative easing (QE) involves increasing the money supply to stimulate growth. Quantitative tightening (QT) involves reducing the money supply, controlling for inflation.
QE can involve stimulating borrowing activity, which can be difficult if interest rates are already low, because people can already get cheap loans. However, banks can perform other actions, such as lowering strict thresholds for loans, increasing QE through being less strict. Debanking, in this sense, could be described as QT, because business loans are being denied for crypto startups, an attempt by banks to deny high risk investments.
Hayes argues that the Fed’s easing of monetary policy could stimulate a bull market for Bitcoin.
Polymarket, a prediction market, has a 100% likelihood that the Fed will end QT before May. If this occurs, QE will likely follow soon after, providing a boost of capital for the Bitcoin market.
Hayes further predicts a Bitcoin crash alongside a market correction, but does not think it will be serious enough to warrant an intervention by the Fed. Hayes prices the pullback at the $70k to $80k level, arguing that it would be a natural part of the bull market. He reasons that the current pullback to $83k may not be the bottom yet, and another drop will present opportunities for spot traders to make good entry trades. Hayes predicts that March 2025 could be a peak period, part of the ongoing bull market, driven by an increase in U.S. dollar liquidity.
QE involves more than simply printing money. The Fed can accomplish the task by repurchasing government bonds from large banks.
Hayes warns that volatility could distort his predictions, with a 20% to 30% stock market drop further pushing the Bitcoin price down, maybe to a more severe low, before continuing its bullish trajectory. Hayes suggests traders spot trade with incremental buying, rather than leveraging trades throughout the volatile period.
QE promotes liquidity, such as with a bank holding $100 million in treasury bonds and $50 million in reserve funds, if the reserve bank buys back $50 million of those treasury bonds, the bank now has $100 in cash reserves, which they can loan out to customers, and stimulate growth.
Hayes is optimistic about Bitcoin, but is cautious about some of Trump’s policies, such a the creation of a Bitcoin reserve, because he claims that the government has more important things to pay for than buying Bitcoin.
Traders, according to Hayes, should take a cautious approach to buying Bitcoin during the transition between QT and QE, using an accumulation approach, using spot trading instead of leverage, and buying incrementally to ride the bull market and mitigate the risk of a volatile price.
