Title: Sound the Alarm: Bitcoins Plummeting Value Could Trigger a Sell-Off
Title: Sound the Alarm: Bitcoins Plummeting Value Could Trigger a Sell-Off
Bitcoin and crypto prices have taken a dive, plummeting alongside stock markets. This downturn can be partly attributed to Elon Musk's unexpected warning about Bitcoin's price.
Despite a major Wall Street investment bank placing a substantial bet on a Bitcoin game-changer, the Bitcoin price dropped from its peak of $100,000 to around $92,000.
Now, as the Bitcoin and crypto market braces for an "imminent" Elon Musk-related bombshell, renowned crypto investor Arthur Hayes has predicted a market crash for late March.
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In his blog post, Hayes, the founder of BitMex and the Maelstrom investment fund, predicted that a selloff would occur in the late stages of the first quarter, with investors waiting for positive fiat liquidity conditions to return in the third quarter.
Hayes suggests that Bitcoin's price follows the trend of dollar liquidity, increasing with surpluses and decreasing with deficits. He has previously predicted a Bitcoin price collapse around the time of Donald Trump's inauguration.
However, Hayes balances this potential negative factor against the impulse of dollar liquidity. "Bitcoin jukes and jives as the pace of dollar emissions changes," he wrote.
The Treasury's General Account is expected to be depleted towards the end of the first quarter due to the U.S. approaching the debt ceiling and the April 15 tax payment deadline. This could exacerbate the market correction.
This week, the Bitcoin price has fallen as traders reassess the 2025 outlook for Federal Reserve interest rate cuts in light of strong U.S. economic data.
"The Trump-dump, which some had anticipated after Trump's inauguration, seems to have been accelerated as the cryptocurrency market plunges into the red zone," Petr Kozyakov, CEO of crypto payment platform Mercuryo, commented.
Trump confirmed his intention to establish a U.S. Bitcoin strategic reserve in December, telling CNBC, "We're gonna do something great with crypto because we don’t want China, or anybody else … but others are embracing it, and we want to be ahead."
However, markets are now less optimistic about Bitcoin's role as an ultra-risky asset, anticipating that the Federal Reserve may keep interest rates elevated for longer than anticipated.
[1]: "Arthur Hayes predicts a Bitcoin and crypto market crash in late March 2025"[4]: "Hayes' Factors Contributing to the Predicted Market Crash"
Jerome Powell, the chairman of the Federal Reserve, has not commented directly on Bitcoin or the predicted crypto market crash, but his monetary policy decisions can indirectly impact Bitcoin's price.
Arthur Hayes' prediction of a Bitcoin price crash in late March 2025 is partly based on the expectation of a selloff due to a depletion of the Treasury's General Account.
The potential Bitcoin and crypto market crash predicted by Hayes could be exacerbated by the Federal Reserve's decision to keep interest rates elevated for a longer period than anticipated.
If Jerome Powell and the Federal Reserve decide to tighten monetary policy, it could further pressure the Bitcoin price and contribute to the predicted crypto market crash.