Arthur Hayes, co-founder of BitMEX, says the Federal Reserve's quantitative and liquidity tightening measures could push bitcoin to a late-Q1 peak.

In his country Latest article It's January. 7, BitMEX Co-founder Arthur Hayes predicts Bitcoin (Bitcoin(It will peak by late March, indicating the challenges the Fed faces in maintaining market stability while withdrawing $180 billion through quantitative tightening from January to March.)

Meanwhile, the change in the reverse repo rate will add $237 billion in liquidity, Hayes notes, explaining that the money will flow into higher-yield Treasuries, resulting in a net liquidity infusion of $57 billion in the first quarter.

The Treasury Department's general account will also play a role. “Bad Girl Yellen” (Hayes’ nickname for Treasury Secretary Janet Yellen) has begun taking “extraordinary measures” to finance the government while waiting for Congress to raise the debt ceiling. Until then, the Treasury can only spend from the TGA, which Hayes estimates will be exhausted by May or June. This spending adds liquidity to the market, but once the cap is lifted, the Treasury will need to refill its account, withdrawing liquidity.

Hayes believes the market will react to these liquidity shifts. He expects Bitcoin and the entire market to peak “in mid-to-late March,” similar to March 2024, when Bitcoin peaked at around $73,000. After that, the market may face headwinds from tax deadlines and TGA replenishment.

The BitMEX co-founder believes the Fed is “exhausting all the tools at its disposal,” adding that future moves could include pausing QT or even restarting quantitative easing. For now, Hayes says liquidity conditions in the first quarter point to a temporary boost for risky assets like Bitcoin.