Bitcoin Tracks Fed’s RRP, Mid-March Peak Expected
The post Bitcoin Tracks Fed’s RRP, Mid-March Peak Expected appeared on BitcoinEthereumNews.com.
Arthur Hayes, former CEO of BitMEX, has issued a bold forecast for the cryptocurrency market, predicting a peak in mid-March 2025, followed by a severe correction. He bases his prediction on an analysis of US dollar liquidity dynamics and their impact on global financial markets, particularly crypto. Role of US Treasury as Bitcoin Price Tracks Fed’s RRP Hayes’ analysis hinges on two key components of dollar liquidity: the Federal Reserve’s Reverse Repo Facility (RRP) and the US Treasury’s General Account (TGA). He notes that since Bitcoin bottomed in the third quarter (Q3) of 2022, its price has largely tracked the RRP’s decline. This, in his opinion, reflects increased market liquidity. “As we begin 2025, the question on crypto investors’ minds is whether the Trump pump can continue,” Hayes wrote in his latest essay, Trump Truth. The Bitmex co-founder acknowledges the risk of market disappointment. He cites possible delays in implementing pro-crypto policies under Trump’s administration. He believes the current dollar liquidity environment remains favorable. The Fed’s quantitative tightening (QT) policy, which reduces its balance sheet by $60 billion per month, will remove $180 billion in liquidity by the end of Q1 2025. However, the Fed’s recent adjustment to the RRP rate is expected to result in a $237 billion liquidity injection. This would offset QT’s impact and yield a net positive liquidity of $57 billion. Hayes highlights the Treasury’s critical role in addressing the debt ceiling, with Treasury Secretary Janet Yellen planning to implement “extraordinary measures” to fund government operations between January 14 and 23. This approach will draw down the Treasury General Account (TGA), currently at $722 billion, temporarily boosting liquidity as new debt issuance halts until Congress raises the debt ceiling. Based on historical spending patterns, Hayes predicts the TGA could be 76% depleted by March. Of note,…
Filed under: News - @ January 7, 2025 8:23 am