Current Market Performance
The cryptocurrency market is demonstrating consistent strength, with the total market capitalization reaching $3.09 trillion, reflecting a 1.1% increase over the past 24 hours. Bitcoin has seen a notable rise to $91,119, marking a 1.55% gain on the day and an impressive nearly 6% increase over the week. Ethereum is also performing robustly, trading at $3,112 after a 1.87% daily rise and a significant 10% jump over the past week.
Arthur Hayes' Bullish Prediction
Former BitMEX CEO Arthur Hayes has forecasted that Bitcoin is entering one of its most potent bullish phases. This prediction is largely attributed to anticipated shifts in U.S. liquidity conditions. In a recent interview, Hayes indicated that the market setup observed in late 2025 bears a strong resemblance to the liquidity surge that propelled Bitcoin to significant highs in the latter half of 2023.
Debt-Ceiling Fights and Their Impact on Liquidity
Hayes elaborated on how political disputes surrounding the debt ceiling, experienced in both 2023 and 2025, create substantial liquidity waves within the financial system. During these periods of negotiation, the U.S. Treasury is compelled to draw down its primary checking account, known as the Treasury General Account (TGA). The government's expenditure from the TGA results in the injection of new dollars into the financial system, a process that typically boosts markets, including Bitcoin.
Conversely, once the debt ceiling is ultimately raised, the government must replenish the TGA by issuing new debt. This action withdraws liquidity from the system, often negatively impacting riskier assets such as stocks and Bitcoin.
Factors Behind the 2023 Bull Run
In 2023, the Treasury's strategy for refilling the TGA involved issuing short-term debt. A key advantage during this period was the substantial presence of approximately $2.5 trillion in the Federal Reserve's reverse repo facility, a remnant from the pandemic era. By offering high-yield short-term Treasury bills, the government successfully attracted this capital from the Fed back into the broader markets.
Hayes stated that this maneuver injected an estimated $2.5 trillion of fresh liquidity into the economy from mid-2023 through early 2025, which served as a catalyst for significant rallies in Bitcoin, equities, gold, and real estate.
The 2025 Outlook: Different Dynamics, Continued Bullishness
The year 2025 presented a different scenario when the debt ceiling was again raised and the Treasury needed to rebuild the TGA. This time, the reverse repo pool was nearly depleted, meaning there was no substantial $2.5 trillion reserve to draw upon.
Consequently, liquidity experienced a tightening of nearly $1 trillion between July and late 2025. This was primarily due to bond issuance and the ongoing quantitative tightening (QT) measures by the Federal Reserve, which effectively reduce the Fed's balance sheet. This contraction in liquidity exerted downward pressure on Bitcoin, contributing to its decline towards the $80,000 range.
The Bullish Catalyst: End of QT and Liquidity Bottom
Hayes identifies the current juncture as a critical turning point, marked by several favorable developments:
- •The Federal Reserve has concluded its quantitative tightening program.
- •Stress on Treasury liquidity is beginning to ease.
- •The TGA is approaching its target level.
- •U.S. banks are showing signs of resuming lending activities.
Hayes suggests that the recent dip to approximately $80,000 represented the cycle's low point. He anticipates Bitcoin's value to increase as global liquidity conditions continue to improve.