Arthur Hayes, co-founder of BitMEX, has reaffirmed his strong prediction that Bitcoin could still reach between $200,000 and $250,000 by the end of 2025. Speaking on the Milk Road Show on November 26, he argued that the recent decline to $80,000 represented the cycle's bottom and signaled a shift in the macroeconomic liquidity outlook favoring Bitcoin.
Despite the volatility experienced throughout October and November, Hayes expressed unwavering confidence in his long-term price target. "I’m going to stick with it," he stated. "If I’m wrong it doesn’t matter… I’m long, I’m still happy either way."
Hayes Identifies $80,000 as the "True Bottom" Following Liquidity Shock
Hayes explained that the significant drop from Bitcoin’s peak of $125,000 to the $80,000 low was a direct consequence of a global liquidity squeeze, rather than an indication of a structural bear market.
He referenced his dollar liquidity index, derived from Bloomberg data, which indicated that approximately $1 trillion had been withdrawn from money markets since July. This liquidity drain was attributed to several factors:
- •The U.S. Treasury's efforts to rebuild its cash reserves.
- •The Federal Reserve's continuation of quantitative tightening measures.
- •Declines in institutional flows that masked the overall tightness of liquidity.
According to Hayes, Bitcoin initially disregarded these signals due to temporary offsets from ETF inflows and Digital Asset Treasury (DAT) issuances. However, once these flows reversed, Bitcoin experienced a sharp correction, aligning with prevailing monetary conditions.
ETF Flows Misinterpreted as Institutional Conviction
Hayes cautioned that retail traders had misinterpreted ETF inflows as a sign of strong institutional bullish conviction.
He revealed that key holders of the IBIT ETF, including Brevan Howard, Goldman Sachs, Millennium, Jane Street, and Avenue, were not engaging as long-term spot buyers. Instead, they were acting as basis traders, capitalizing on the spread between ETF shares and futures contracts.
"They buy the ETF, pledge it, short futures and earn 7 to 10 percent annually," Hayes explained. As funding rates decreased in September and October, these traders unwound their strategies, leading to ETF outflows that were mistakenly perceived by retail investors as institutional selling.
Digital Asset Treasuries Also Lost Their Advantage
Companies involved in Digital Asset Treasuries (DAT), which issue stock and debt to acquire Bitcoin when it trades at a premium to Net Asset Value (NAV), also contributed to the downward price pressure.
As their valuations returned to par or a discount, these entities could no longer profitably issue new securities. In some instances, they were incentivized to sell Bitcoin and buy back their own shares.
Hayes contended that these combined unwinds were merely a reflection of the tightening liquidity cycle and did not signify a fundamental shift in Bitcoin’s long-term outlook.
Reasons for Bitcoin's Stagnation Around $90,000
When questioned about Bitcoin's range-bound trading near $90,000, Hayes suggested that markets are awaiting definitive confirmation that the new U.S. administration will initiate another phase of liquidity injection.
He pointed out that discussions surrounding aggressive bank lending, a new industrial stimulus strategy, and a potential change in Federal Reserve leadership remain political promises rather than implemented programs.
Markets require clarity on how the upcoming deployment of "$10 trillion" in liquidity will occur, Hayes stated. He anticipates a sharp acceleration in Bitcoin's price once tangible policy actions are enacted.
"We have essentially bottomed on the liquidity chart," Hayes concluded. "The direction from here is higher."