Mariah Carey 's Christmas carols are ready to go, but Arthur Hayes remained defiant on Wednesday when he appeared on the Milk Road Show YouTube: Bitcoin will hit $250,000 by the end of the year.
With the price of BTC currently hovering around $90,000, the idea of it surging by thousands of dollars per day sounds outrageous, but putting price aside, Arthur Hayes's argument is still worth considering.
Quantitative tightening exits, basis trading disappears
After hitting a high of $126,210 in October, Bitcoin plummeted to $80,600, and Wall Street is busy digesting this 20% pullback. Arthur Hayes had warned before Thanksgiving that there would be a retest of the $80,000 to $85,000 range, and last week's precise drop in BTC's price and subsequent rebound has led many to reconsider his analogy of the crash as a "spring compressed to its limit."
Arthur Hayes observed that two hidden forces are shifting. He said the first is that basis arbitrage positions on ETFs are being closed out one after another, which is equivalent to removing the heavy pressure that was suppressing the spot market. When the artificial selling pressure is released, price discovery will return to the buyers.
Second, while the Federal Reserve verbally emphasizes quantitative tightening, the passively expanded dollar base has begun to flow back into the market amid tight liquidity in US Treasury bonds. Arthur Hayes described this as akin to a diver in oxygen being given an oxygen tank, providing a chance for risky assets to breathe.
Trump's fiscal impulsiveness and the Federal Reserve's dilemma
The political and economic landscape of 2025 further complicates the liquidity issue. Trump, upon taking office, favored low interest rates and high asset prices; Powell, on the other hand, sought to curb inflation. When Powell hinted that a rate cut in December was not certain, market expectations for easing plummeted from 98% to 22%, triggering a sharp correction in November.
Arthur Hayes, however, focused on the balance of the U.S. Treasury General Account (TGA), arguing that the U.S. will eventually turn on the printing press again to support government spending, and that interest rate guidance is just smoke and mirrors.
Chip reshuffling: Institutional panic, whale accumulation
Last week, Bitcoin ETFs saw a weekly outflow of $1.1 billion, indicating that traditional financial funds are seeking safe havens. However, on-chain data suggests that large long-term holders accumulated 375,000 BTC against the trend within 30 days. Simply put, this could be a case of "paper hands" selling and "diamond hands" buying, a scenario that has played out multiple times in BTC's history at low points.
