Key Insights
- •BitMEX co-founder Arthur Hayes projects coordinated monetary easing from the US and China will trigger the next crypto bull run, even with Bitcoin's recent decline.
- •Hayes attributes Bitcoin's weakness to contracting USD liquidity and fading institutional flows, not political rhetoric.
- •He forecasts Bitcoin could fall to $80,000-$85,000 before rebounding to $200,000-$250,000 by year-end due to accelerating money printing.
BitMEX co-founder Arthur Hayes released an analysis on November 17 explaining how upcoming monetary interventions from the US and China will catalyze the next crypto bull run.
Hayes wrote in his “Snow Forecast” blog that Bitcoin dropped 25% from its October high due to contracting dollar liquidity. His USD Liquidity Index fell 10% since April 9, while Bitcoin initially rose 12% before reversing.
Bitcoin’s Weakness Stems from Contracting USD Liquidity
The crypto bull run that began after President Donald Trump’s April 9 tariff truce masked deteriorating liquidity. Hayes explained that Bitcoin initially rallied 21% following the de-escalation.
Bitcoin’s decline reflected the end of artificial institutional support. Hayes stated that BlackRock’s IBIT ETF largest holders were hedge funds executing basis trades, buying the ETF while shorting CME Bitcoin futures.
When the annualized basis fell below attractive levels, hedge funds exited positions. The ETF complex recorded massive outflows.
Hayes stated that the flows created the impression of institutional adoption when traders sought only extra points over Fed Funds rates.
Fading Institutional Flows Exposed Negative Liquidity Picture
Digital Asset Treasury companies like Strategy (MSTR) provided another channel for exposure. As premiums evaporated into discounts, firms slowed Bitcoin purchases.
Hayes noted that ETF inflows and DAT purchases allowed Bitcoin to rise despite contracting liquidity. Without these flows, Bitcoin fell to reflect liquidity concerns.
Hayes explained $1 trillion of dollar liquidity had evaporated since July. Bitcoin’s dive from $125,000 to the low $90,000s while the S&P 500 hovered near highs indicated a brewing credit event.
Additionally, Hayes expressed confidence that President Trump and Treasury Secretary Scott Bessent will engineer monetary expansion to maintain Republican power ahead of the 2026 midterms.
The analysis drew parallels to 2022 when Treasury Secretary Janet Yellen issued Treasury bills to drain $2.5 trillion from the Fed’s Reverse Repo Program. This maneuver pumped stocks, housing, gold, and crypto while appearing to fight inflation.
Hayes projected that Bessent must work the same kind of magic. Political pressure will mount once equity markets correct 10% to 20% and 10-year Treasury yields approach 5%.
China Will Join Crypto Bull Run Once US Accelerates Dollar Creation
The crypto bull run will gain fuel when China’s central bank launches quantitative easing. Hayes noted that the People’s Bank of China purchased government bonds for the first time since January, marking the beginning of China’s quantitative easing.
President Xi Jinping will accelerate yuan creation once the US increases dollar supply. Hayes predicted the dragon would awaken and fuel the raging 2026 crypto bull run.
Hayes found it telling that Beijing was upset the US seized Bitcoin from a Chinese national. With both Trump and Xi treating Bitcoin as valuable, Hayes questioned why investors wouldn’t be bullish in the long term.
Hayes forecasted that Bitcoin could drop to the range of $80,000 to $85,000 before monetary authorities restart printing. If risk markets implode and the Fed accelerates money creation, Bitcoin could surge toward $200,000 or $250,000 by year-end.
The counterargument was that the Treasury General Account decreased by $100 billion, from $150 billion to $50 billion, post-shutdown. The Fed will also stop shrinking its balance sheet on December 1. Hayes noted this injection is marginal compared to the $1 trillion evaporated since July.
Markets must first retrace gains to align with liquidity fundamentals. Hayes stated Bitcoin will hit new all-time highs only after markets decline enough to accelerate money printing.
Hayes disclosed that his firm, Maelstrom, raised stablecoin positions over the weekend, anticipating lower prices. He identified Zcash (ZEC) as the only crypto that could outperform during adverse liquidity conditions.
Hayes argued that privacy-focused cryptos using zero-knowledge proof cryptography represented humanity’s defense as AI, big tech, and government eliminated privacy. Maelstrom remained heavily long crypto despite raising cash.