Key Takeaways
- •Arthur Hayes links Bitcoin's weak 2025 performance to tight dollar liquidity.
- •He predicts a comeback in 2026, surpassing $110,000.
- •MicroStrategy and Zcash may see correlated gains.
Arthur Hayes, co-founder of BitMEX, has analyzed Bitcoin's projected weak performance in 2025. In his essay titled "Frowny Cloud" published on Substack, Hayes attributes this anticipated underperformance to the Federal Reserve's quantitative tightening policies, which are expected to impact U.S. dollar liquidity. He stated, "Forget about 2025 and Bitcoin’s underperformance; the liquidity didn’t support our crypto portfolios. But let’s not draw the wrong conclusions from Bitcoin’s 2025 underperformance. It was as it always is, a liquidity story."
Hayes, who also serves as CIO at Maelstrom, forecasts a significant rebound for Bitcoin in 2026. He predicts that with anticipated expansions in dollar liquidity, Bitcoin's price could potentially exceed $110,000. He also suggests that related assets, such as MicroStrategy and Zcash, might experience correlated gains, highlighting the crucial role of liquidity in the performance of these assets.
Market Dynamics and Historical Trends
During late 2025, Bitcoin was expected to trade within a range of $87,000 to $95,000. This constraint is directly linked to the scarcity of dollar liquidity. Hayes draws parallels to historical trends observed post-2008, where contractions in the dollar supply have historically affected Bitcoin's performance, often causing it to underperform compared to other assets like gold and technology stocks.
The tight market conditions predicted for 2025 are consistent with past cycles where a scarcity of dollars exerted downward pressure on risk assets, including Bitcoin. Hayes specifically noted that related equities, such as MicroStrategy and Metaplanet, faced similar pressures. This observation underscores his argument that liquidity dynamics, rather than intrinsic issues with the assets themselves, are primary drivers of their market performance.
Future Outlook and Liquidity Expansion
Bitcoin's historical performance during periods of dollar liquidity expansion has demonstrated a strong positive correlation between increased dollar supply and growth in crypto assets. Hayes projects that this trend will continue post-2026, with anticipated liquidity expansions potentially driving upward momentum in Bitcoin's pricing.
The anticipated future expansion of dollar liquidity is expected to provide a significant boost not only to Bitcoin but also to other correlated assets. This aligns with established historical patterns in the financial markets. Hayes maintains an optimistic outlook regarding the combined impact of technological advancements and monetary policy shifts, reinforcing confidence in the potential of crypto assets amidst predicted macroeconomic changes.