Arthur Hayes believes Bitcoin’s October flush to $80,000 marked the top of a liquidity-driven reset, not the beginning of a brand new bear market – and that the structural forces that pushed BTC down at the moment are reversing.
$80,000 Was The Backside As Greenback Liquidity Turns
In a Milk Highway Present episode recorded November 26 and launched November 27, the BitMEX co-founder argued that the much-celebrated US spot ETF “institutional bid” was largely a leveraged foundation commerce that has now run its course similtaneously US greenback liquidity seems to have bottomed.
“And in order that’s why I imagine that the $80,000 dip on Bitcoin lately is the underside,” Hayes stated. “And now we’re going to have a supportive liquidity scenario, at the least marginally on the greenback, and we’re backside right here and might go greater.”
Hayes remains to be brazenly concentrating on a blow-off transfer into the $200,000–$250,000 vary by year-end, repeating the decision from his current “Snow Forecast” essay. “I’m going to keep it up,” he stated. “If I’m fallacious it doesn’t matter. I’m lengthy, proper? I’m nonetheless completely satisfied both means. It’s both $200k–$250k or not.”
Associated Studying
On the time of recording, the host famous Bitcoin was “again above $90K.” Hayes stated ETF movement charts that dominated crypto social media within the spring and summer season badly misled retail. He pointed to the biggest holders of BlackRock’s iShares Bitcoin Belief (IBIT) – Brevan Howard, Goldman Sachs, Millennium, Avenue, Jane Avenue – as proof that the dominant gamers weren’t long-only allocators.
“These entities usually are not locations the place they’re simply going to go lengthy Bitcoin,” he stated. As an alternative, they have been operating a typical foundation commerce: shopping for IBIT, pledging it as collateral and shorting CME futures. “They have been making, let’s name it 7 to 10% each year on that commerce. They fund Fed funds at four-ish % and so they lever it up.”
When the futures foundation collapsed following the October 10 liquidation cascade, that commerce needed to be unwound by promoting the ETF and masking futures shorts, flipping internet ETF flows from robust inflows to outflows. Retail buyers misinterpret that as “establishments turning bearish.”
“Retail thinks, ‘Oh no, establishments beloved Bitcoin in the summertime and now they hate it within the fall, due to this fact I have to do away with my publicity as effectively,’ not understanding what was driving these flows within the first place,” Hayes stated.
He paired this with a second short-term pillar: listed digital asset treasury (DAT) corporations that difficulty inventory or debt to purchase Bitcoin. As soon as these automobiles traded at internet asset worth or a reduction, new issuance turned uneconomic and in some circumstances incentivized promoting BTC to purchase again shares, eradicating one other marginal purchaser.
Macro Circumstances Are The Key Catalyst
In opposition to that micro backdrop, Hayes situates a a lot bigger macro shift. He tracks a proprietary US greenback liquidity index constructed from Fed steadiness sheet collection and industrial financial institution information. In his telling, roughly a trillion {dollars} of liquidity was drained from greenback cash markets from July onward resulting from Treasury Common Account (TGA) refilling and Federal Reserve quantitative tightening.
Associated Studying
In 2023, then-Treasury Secretary Janet Yellen may offset that drain by issuing large quantities of high-yielding T-bills that pulled about $2.5 trillion out of the Fed’s reverse repo facility again into the system. In 2025, he argues, Treasury Secretary Scott Bessent had no such reservoir to faucet.
Now, Hayes says, each the TGA rebuild and QT have successfully run their course. The TGA has been restored to its goal zone, and the Fed has halted steadiness sheet runoff.
“Now we have basically bottomed on the liquidity chart and the route sooner or later is greater,” he stated, including that markets are nonetheless ready to see how the Trump administration really delivers on guarantees of large credit score creation through industrial coverage, financial institution lending and a extra dovish Fed.
He expects the subsequent leg of liquidity to return extra from industrial banks than the central financial institution, citing early indicators of rising financial institution lending and public commitments from establishments like JPMorgan to finance giant industrial applications.
Hayes was equally direct on the October 10 wipeout, calling it a harsh lesson for underprepared leveraged merchants reasonably than a coordinated hunt. “Individuals assume that I’m going to get off of labor and commerce leveraged crypto for just a few hours and I’m going to one way or the other generate profits. No, you’re going to get liquidated,” he stated. “If you’re a correct dealer, you shouldn’t get liquidated. Interval.”
On positioning, Hayes stated he used the post-crash atmosphere to purchase what he considers essentially robust altcoins like Pendle, Ethena and EtherFi at ranges final seen months earlier. He expects these to outperform ETH within the brief time period however nonetheless backs the long-term “institutional DeFi” narrative that might take Ethereum to “the $10,000 to $20,000 worth by the top of the cycle.”
For now, his core thesis is easy: the ETF foundation commerce is basically gone, the liquidity drain is over, leverage has been flushed – and the macro tide, in his view, is popping again in Bitcoin’s favour.
At press time, BTC traded at $91,004.
Featured picture created with DALL.E, chart from TradingView.com