On January 7, BitMEX co-founder Arthur Hayes explained in his latest long article why he believes that the crypto market will peak in mid-March and then experience a severe correction by analyzing the US dollar liquidity environment in the first quarter of 2025 and its impact on the crypto market. With the decline in the balance of the Federal Reserve’s reverse repurchase facility (RRP) and the release of funds from the Treasury General Account (TGA), it is expected that about $612 billion in liquidity will be injected in the first quarter, supporting Bitcoin and other assets.

However, the Fed’s quantitative tightening (QT) will reduce liquidity by about $180 billion, and the debt ceiling issue may trigger a liquidity shift in the second quarter. The Treasury may pay government expenses through TGA until May-June, and then need to raise the debt ceiling, which will have a negative impact on liquidity. In addition, peak tax periods (such as mid-April) will further suppress market liquidity. Despite many macroeconomic variables, the impact of RRP and TGA fund flows on the market is relatively clear. In summary, the market is expected to reach a short-term high at the end of the first quarter and may enter a period of adjustment thereafter.

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