BitMeX co-founder Arthur Hayes has given the crypto market a huge shock when he said that Donald Trump's second presidential inauguration on January 20 will trigger a crash in the market. This comes at a time when the Feds announced the final rate cuts for 2024, and the Fed chair's comments on the inability to hold Bitcoin have made the market dip.
Many are questioning Hayes’ prediction as Trump is known for his pro-crypto stance, including the formation of a Bitcoin Strategic Reserve, which has caused recent rallies. Meanwhile, Donald Trump has reiterated his pro-crypto stance at the Washington Crypto Policy Summit, where he assured blockchain enthusiasts that the U.S. intends to keep “our business in the United States, rather than China or some other place”.
Lotex Ecosystem head Larry Pang said that “the next 100 days are crucial for legislation in the U.S. crypto industry. Decentralised physical infrastructure network has been listed as a priority legislative area alongside stablecoins, defi, staking”.
According to the BitMeX cofounder, the crypto market will see a substantial decline in the first few months of 2025. Although Hayes has shifted his year-end dip prediction to January 20, he expects a temporary bearish run this week, which is likely to be a test for Bitcoin and the larger crypto market.
Despite the crypto market crash prediction, Arthur Hayes still believes that the market has long-term bullish potential, as he thinks that the market will bounce back after the adjustment period.
Hayes has termed this as a “crack-up-book” after the market goes through a dip that will make way for the expansion of digital assets.
Crypto Market Rally Attributed to Bitcoin Strategic Reserve Talk
The BitMeX cofounder has attributed the recent rally in the crypto market to the Bitcoin Strategic Reserve (BSR) talk after Trump said the US seeks to be a world leader in cryptocurrency. Most experts and investors are optimistic about this, as they hope it will drive Bitcoin adoption.
However, Hayes is unsure of the US government actually buying Bitcoin, saying that politicians would spend dollars on services instead of investing in Bitcoin. Still, he thinks BSR talks are a positive attribute for the crypto market as they are creating buying pressure that has supported growth for months.
This is vindicated by Fed Chair Jerome Powell’s comments yesterday when he said that the central bank can’t own the digital currency under current regulations, and it is not seeking a law change. "That's the kind of thing that Congress to consider, but we are not looking for a law change," said Powell. This led to a significant decline in Bitcoin market cap as MicroStrategy shares fell by 9.5% while Bitcoin miners MARA Holdings and Riot Platforms went down between 12-14%.
Long-term Gains Vs Short-terms Setbacks
According to Arthur Hayes, the future of Bitcoin is upbeat despite the short-term setbacks as the current run-up lowers prices. The forecasted “harrowing dump” of January is likely to be one of the four corrections before Q2 2025.
This will be a major event for the crypto market, as it is already experiencing price volatility. But recently, Altcoins and Bitcoin dipped after they recorded new highs. Like Bitcoin going down 2.5% to $103,440 after hitting the ATH of $108,268. Altcoins like Cardano, XRP, and Ethereum also experienced such price movements.
Hayes pointed out that crypto investors are booking profits to counter increased prices amidst market uncertainty. This has caused the crypto market cap to fall by 3% to $3.64 trillion, raising some anxiety among investors.
As per Hayes, it's crucial that investors look for a short-term dip in January so that they align their positions at better prices.