In recent times blog post, serial crypto entrepreneur and commentator Arthur Hayes predicts that a new injection of liquidity into the US economy following the inauguration of President-elect Donald Trump could boost Bitcoin (BTC) rally in Q1 2025.
Printing money to transfer Bitcoin?
Despite surpassing $100,000 on January 6, BTC faced a sharp decline to as low as $94,543 earlier today, casting doubt on the so-called “Trump rally” that many expected lasted until Trump's inauguration on January 20.
Related Reading
Recent market action is in line with Hayes' December forecast, in which he warning of a possible “harrow dump” in the digital currency market around Trump's inauguration. At the time, Hayes attributed this sell-off to an expected regulatory crackdown from the incoming Trump administration.
However, in his most recent post, Hayes suggested that the US Federal Reserve's (Fed) plan to inject $612 billion of new liquidity into the economy could make up for the lack of regulatory progress and ignite a new wave of momentum for BTC. BitMex co-founder said:
Dropping by the Trump team on the proposed pro-crypto and pro-business legislation can be covered by a very positive dollar liquidity environment, increasing up to $612 billion in the first quarter.
Hayes explained that the Fed is expected to increase money printing after Trump's inauguration, possibly driving BTC and other digital assets to a local peak before a subsequent pullback. He said market disappointment over weak crypto regulation under the Trump administration would exacerbate a correction.
The crypto entrepreneur advised to sell towards the end of Q1 2025 and wait for favorable liquidity conditions to return in Q3 2025. As soon as new liquidity enters the market, Hayes suggested that it would be time for investors who sought to “turn the risk dial to degen. “
Split Opinion On BTC Price Action
While Hayes expects a BTC rally later this quarter, other analysts and market commentators remain cautious. For example, a recent report by 10x Research was noted that the Fed's delay in cutting interest rates could dampen BTC's bullish trend.
Similarly, technical analysis recommending that BTC may be forming a bearish head-and-shoulders pattern on the weekly chart, raising fears of a pullback to as low as $80,000. Yesterday's failure to recapture the $100,000 price level has certainly dampened the bulls further.
On the other hand, the CEO of Bitcoin mining company MARA recently application long term “invest and forget” strategy for BTC. He suggested that the US's strategic Bitcoin reserve could trigger a global race among countries to collect BTC, driving up its price.
There is institutional interest in BTC already increased, as evident from recorded inflows received with the US spot Bitcoin exchange-traded fund (ETF). 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
