This article is also available in Spanish.
In a new article published on Monday, Arthur Hayes – a well-known digital asset investor and former CEO of BitMEX – argues that the crypto market is poised for a strong rally in the first quarter of 2025 before breaking out “in mid-March” . Hayes’ latest essay, titled “Sasa,” delves into several macroeconomic variables, including US Federal Reserve (Fed) policy, US Treasury General Account (TGA) balances, the Fed’s Reverse Repo Facility (RRP), and political uncertainty in Washington.
Hayes began his story by putting a clear episode from the Hokkaido ski resorts of Japan, likening the dangerous back conditions caused by insufficient snow cover over the sharp bamboo grass (sasa) to the potential market barriers that could cut short crypto circles. He sees the year 2025 as having started in the middle of the snow in Hokkaido—an apt metaphor for what he sees as “dumping” money that could drive up digital asset prices. However, he warns that the political and financial situation in the United States may bring unexpected risks.
Why March Could Mark Crypto’s Next Peak
“As we enter 2025, the question on the minds of crypto investors is whether the Trump pump can continue,” Hayes wrote, referring to the initial confidence surrounding President Donald Trump’s second term. While Hayes believes that “high policy expectations from the Trump camp are setting up a market for pessimism,” he insists that any short-term uncertainty could be offset by a strong “dollar liquidity impulse.”
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Hayes insists that the Fed’s RRP has been very important in tracking the price of Bitcoin. Starting in the third quarter of 2022, the establishment of this facility has been positively correlated with crypto prices and equities.
“Bitcoin declines in Q3 2022 when the Fed’s Reverse Repo Facility (RRP) reaches its maximum,” he explained, noting that US Treasury Secretary Janet “Bad Gurl” Yellen helped shift from issuing long-term coupon bonds to issuing T-term short. – debts. He says, this way of working has released more than two billion dollars from the RRP, putting the economy in the world market.
Now, with the RRP falling to almost zero, the Fed “later changed the RRP policy rate” to make it less attractive. Hayes points out that there is still an injection of about $237 billion in the markets if the remaining RRP funds go into high-yielding Treasury bonds. Meanwhile, ongoing quantitative tightening (QT) is removing $60 billion a month, including $180 billion between January and March. Finding both of these factors yields an injection of $57 billion per quarter.
Another focus of Hayes’s thesis is the Treasury’s General Account. As the bailout talks loom, the Treasury’s inability to issue new debt means it can only cover costs by spending the TGA—a cash-generating act.
“Because the total debt cannot increase until Congress increases the debt ceiling, the Treasury Department can only use money from its checking account, the TGA,” Hayes wrote, noting that the balance is about $722 billion.
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He estimates that without resolving the debt, the TGA could end in May or June. In the crypto markets, the crux of the matter is the timing of the Congressional agreement. The essay highlights Trump’s majority and the possibility that Republicans who position themselves as conservatives will not give a quick or easy concession. Democrats, Hayes adds, are less likely to be able to help a president they oppose spend more money—perpetuating the legislative spiral.
According to Hayes’ calculations, the TGA deduction could generate an additional $555 billion from January through March. Combined with a total of $57 billion from the Fed’s RRP and QT adjustments, the total dollar amount would increase by as much as $612 billion in the first quarter.
Hayes will end in March as a crisis—when this growth may begin to slow and expectations of new federal spending or pro-crypto legislation from the Trump administration may not materialize on schedule.
“I believe I have answered the question I asked at the beginning. That is, the future of Trump’s team’s reduction in his proposed crypto-crypto and pro-business legislation can be covered by a very good situation of dollar liquidity, “he said, before concluding that the high value of the currency can quickly subside if the market expects the resolution of the debt ceiling and and subsequent TGA refills.
From a historical lens, Hayes cites the price action of Bitcoin in 2024, which peaked in mid-March at around $73,000, then skidded sideways and fell just before the April 15 tax deadline. The thinking, he suggests, is straightforward: fast as soon as the implementation of TGA has started, the net income picture returns to neutral or negative, leaving risky assets vulnerable.
While Hayes admits that China’s credit expansion, the Bank of Japan’s interest rate policies, and the Trump administration’s strategy of devaluing the dollar against other major currencies or gold may improve his timeline, he hopes that the mechanics of RRP and TGA are reliable near-term gauges. What’s worse is that these twin sources of revenue appear strong enough to offset any disappointment about Trump’s policies until the end of March.
“None of these major macroeconomic problems are known a priori, but I trust the calculations behind how the balance of RRP and TGA will change over time,” he said, emphasizing that the growth of the crypto market and stock markets from the end of 2022 is in line with Very high RRPs.
Hayes concludes by suggesting that, historically, markets tend to provide significant sales opportunities in the first quarter. During the spring, investors may want to take profits and “chill on the beach” while waiting for improved spending conditions to re-emerge in the second half of the year. “Soon, like every other year, it will be time to sell towards the end of the first quarter,” Hayes concluded.
At press time, Bitcoin traded at $101,344.
Featured image from YouTube, chart from TradingView.com