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In recent blog post, serial entrepreneur and cryptocurrency commentator Arthur Hayes predicted that fresh injections of liquidity into the US economy following the inauguration of President-elect Donald Trump could spur Bitcoin (BTC) growth in the first quarter of 2025.
Printing Money to Fuel Bitcoin?
Despite rising above $100,000 on January 6, BTC faced a acute decline today to just $94,543, casting doubt on the so-called “Trump rally” that many expected to last until Trump’s inauguration on January 20.
Recent market action lines up with Hayes’ December forecast, in which he warned a potential “shock dump” in the cryptocurrency market around Trump’s inauguration. At the time, Hayes attributed this anticipated sell-off to perceived regulatory disappointments from the modern Trump administration.
However, in his latest post, Hayes suggested that the US Federal Reserve’s (Fed) plan to inject $612 billion of liquidity into the economy could offset the lack of regulatory progress and usher in modern upward momentum for BTC. The BitMex co-founder noted:
The Trump team’s letdown over his proposed pro-cryptography and pro-business regulations could be offset by an extremely positive dollar liquidity environment, rising to $612 billion in the first quarter.
Hayes explained that the Fed is expected to escalate money printing after Trump’s inauguration, possibly pushing BTC and other digital assets to a local high before falling later. He added that market disappointment with delayed cryptocurrency regulations under the Trump administration will exacerbate the correction.
The cryptocurrency trader recommended selling at the end of the first quarter of 2025 and waiting for favorable liquidity conditions to return in the third quarter of 2025. Hayes suggested that as fresh liquidity enters the market, it’s time for risk-seeking investors to “set the risk dial to “degeneration.” “
Opinions on BTC’s price action are divided
While Hayes predicts BTC growth towards the end of this quarter, other analysts and market commentators remain cautious. For example, a recent report from 10x Research excellent that the Fed’s delay in lowering interest rates could dampen BTC’s upward momentum.
Similarly, technical analysis suggests that BTC may form a bearish head and shoulders pattern on the weekly chart, increasing drawdown fears to as high as $80,000. Yesterday’s failure to decisively regain the $100,000 price level further worried the bulls.
On the other hand, recently the CEO of Bitcoin mining company MARA recommended 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 among nations to accumulate BTC, driving up its price.
There is institutional interest in BTC Already is growing, as evidenced by record inflows received by US Bitcoin spot funds (ETFs). At the time of publication, BTC is trading at $95,154, down 3.6% in the last 24 hours.
Featured image from Unsplash, chart from TradingView.com