This article is also available in Spanish.
In a recent blog In a post, commentator and serial crypto entrepreneur Arthur Hayes predicted that new liquidity injections into the US economy following the inauguration of President-elect Donald Trump could spur a bitcoin (btc) rally in the first quarter of 2025.
Printing money to boost bitcoin?
Despite surpassing $100,000 on January 6, btc faced a sharp drop to as low as $94,543 today, casting doubt on the so-called “Trump rally” that many expected to last until Trump's inauguration on January 20. .
Related reading
The recent market action aligns with Hayes' December forecast, in which <a target="_blank" href="https://bitcoinist.com/crypto-may-see-harrowing-dump-around-trumps-inauguration-warns-arthur-hayes/” target=”_blank” rel=”nofollow”>warned of a possible “heartbreaking dump” in the cryptocurrency market around Trump's inauguration. At the time, Hayes attributed this planned liquidation to perceived regulatory disappointments by the incoming Trump administration.
However, in his latest post, Hayes suggested that the US Federal Reserve's (Fed) plan to inject $612 billion of new liquidity into the economy could offset the lack of regulatory progress and generate fresh bullish momentum for btc. The BitMex co-founder commented:
Team Trump's disappointment over its proposed pro-crypto and pro-business legislation may be offset by an extremely positive dollar liquidity environment, up as much as $612 billion in the first quarter.
Hayes explained that the Federal Reserve is expected to increase money printing after Trump's inauguration, which will likely drive btc and other digital assets to a local high before a subsequent pullback. He added that market disappointment over the delay in cryptocurrency regulation under the Trump administration would exacerbate the correction.
The crypto entrepreneur advised selling towards the end of the first quarter of 2025 and waiting for favorable liquidity conditions to return in the third quarter of 2025. Once new liquidity enters the market, Hayes suggested it would be time for risk-seeking investors to ” turn the dial from risk to degeneration. “
Divided opinion on btc price action
While Hayes anticipates a btc rally later this quarter, other analysts and market commentators remain cautious. For example, a recent report from 10x Research noted that the Federal Reserve's delay in cutting interest rates could curb btc's bullish momentum.
Likewise, technical analysis suggests that btc may be forming a bearish head and shoulders pattern on the weekly chart, raising fears of a drop to as low as $80,000. Yesterday's failure to decisively reclaim the $100,000 price level has further unsettled the bulls.
On the other hand, the CEO of the bitcoin mining company MARA recently defended a long-term “invest and forget” strategy for btc. He suggested that a strategic reserve of bitcoin in the US could trigger a global race between nations to accumulate btc, driving up its price.
Institutional interest in btc is already on the rise, as evidenced by record entries received by US Spot bitcoin Exchange Traded Funds (ETFs). At press time, btc is trading at $95,154, down 3.6% in the last 24 hours.
Featured image from Unsplash, chart from TradingView.com
