Isabella García
Arthur Hayes, ex-CEO of BitMEX and current chief investment officer at Maelstrom, has encouraged bold investment strategies, suggesting risk-takers should turn their settings to “degen.” Hayes foresees the ongoing “Trump pump” crypto bull cycle extending until mid-to-late March, fueled by dollar liquidity and investor sentiment.
In his latest essay, Hayes revised his earlier prediction from December, where he warned of a potential market downturn around Donald Trump’s inauguration. Now, he believes sufficient liquidity from the U.S. dollar can counterbalance the risks of unmet pro-crypto policy expectations under Trump’s administration.
Liquidity as the Driving Force
Hayes projects a significant influx of liquidity into financial markets, estimating $237 billion in the first quarter of the year due to changes in the Federal Reserve’s Reverse Repo Facility (RRP). He anticipates this facility will near depletion by the end of March, injecting previously idle cash into the economy.
Key contributors to this liquidity surge include:
- RRP Rate Adjustments: With the Fed reducing interest paid on RRP deposits, financial institutions are likely to redirect funds into the broader market.
- Treasury Spending: Facing debt ceiling constraints, the U.S. Treasury is expected to spend down its General Account (TGA), further boosting liquidity.
Hayes estimates these factors will combine to create $612 billion in liquidity by the end of Q1.
While Hayes remains optimistic about the near term, he warns of headwinds emerging around March as the TGA depletes. Factors like debt ceiling negotiations, tax payment deadlines, and potential fiscal tightening could create negative liquidity pressures. He also highlights global variables, including the Bank of Japan’s policy decisions, as potential influencers.
Strategic Investments in Decentralized Science (DeSci)
Given the current landscape, Hayes revealed Maelstrom’s strategy to increase exposure to Decentralized Science (DeSci) tokens. These tokens leverage blockchain technology to advance scientific research and innovation. The family office has already invested in assets such as BIO, VITA, ATH, GROW, PSY, CRYO, and NEURON.
Despite uncertainties, Hayes expressed overall confidence in his bullish stance, citing the robust liquidity environment as a key driver. “Anything can happen, but on balance, I am bullish,” he stated, reinforcing his belief in the potential for sustained market gains in the coming months.
