Key Insights
- Arthur Hayes explains how major investment firms used Bitcoin (BTC USD) ETFs to profit and how they may have crashed the price.
- How raising the debt ceiling and treasury bill issuance have been negatively affecting liquidity in the market
- Why Hayes believes that $80,000 price level was the bottom and could usher in another rally in 2026.
Crypto traders have been cautious about buying back into Bitcoin despite its recent recovery.
This is because, for the last few months, the cryptocurrency has been lending itself to capitulation, and traders have now been conditioned to lean towards caution.
Well, some analysts claim that this time, Bitcoin (BTC USD) may extend its relief recovery into a full-blown rally.
Among those analysts was BitMex founder Arthur Hayes, who claims that already found a local bottom near $80,000.
Hayes spoke during a Milk Road interview when he made the bold statement about Bitcoin’s bottom. However, he also revealed key details about the crash from August to November.
According to Hayes, bullish expectations before the crash were mostly perpetuated by Bitcoin ETFs and digital asset treasury companies.
The BitMex founder revealed that the largest Bitcoin ETF investors may have triggered the cascading liquidity flows.
As per Hayes’ explanation of the market dynamics, Wall Street companies such as Goldman Sachs, Jane Street, Avenue, and a few others executed Bitcoin basis trades.
However, the same institutions unwound their positions as funding rates cooled, thus selling their ETF positions.
In Bitcoin’s case, Bitcoin treasury companies may have exited their positions and used the funds secured to buy back their stock at discounted prices.
Hayes Explains Why Bitcoin & Other Risk Assets Crashed Despite Rate Cuts
Most people expected that risk-on assets such as Bitcoin (BTC USD), altcoins, and stocks would rally if the U.S Federal Reserve slashed rates.
However, the markets have been crashing despite there being 2 rate cuts this year in September and October.
Hayes noted that the U.S. Treasury needed to raise between $500 billion and $1 trillion after the U.S government raised the debt ceiling.
This also meant that the government had to raise funds from the market, which was done through a debt issuance process that sucked liquidity from the markets.
This negative liquidity in the market was also worsened by other factors, such as concerns about the AI bubble popping.
The BitMex founder mentioned that an accelerating lending pace would be among the major signs confirming a bullish bias for the markets.
Hayes believes that the U.S government will likely push banks to lend more, especially towards industrial activity.
This may boost economic output in some of the hottest industrial segments. In other words, the FED’s policies are still deeply rooted in crypto market outcomes.
How Far can Bitcoin (BTC USD) Go to the Upside by Year End?
While Hayes is optimistic that Bitcoin may have achieved its bottom near $80,000, a few questions remain.
Can Bitcoin achieve a faster recovery in December, and how far can it really go to the upside? Some top analysts predicted that Bitcoin could reach $120,000 by the end of 2025.
This would, however, require BTC to achieve a robust liquidity injection within the remaining 4 weeks to the end of 2025.
BTC’s recovery has so far been relatively slow and lacking excitement. The FED may switch this up as early as the first week of December 2025.
On the other hand, the prediction that the market has bottomed out may not offer a complete guarantee of a recovery without first breaking the $80,000 price level.