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In his latest Substack essay “Snow Forecast,” published November 17, 2025, Arthur Hayes argues that Bitcoin’s sharp drawdown from its October all-time high is a straightforward consequence of tightening dollar liquidity once derivative-driven “fake flows” into Bitcoin have dried up. For Hayes, Bitcoin is “the free-market weathervane of global fiat liquidity” that trades on expectations of future money supply rather than day-to-day headlines.
Why Is The Bitcoin Price Down?
He looks back to the “US Liberation Day” turmoil on April 2, 2025, when aggressive tariff moves from the Trump administration initially sparked fears of a depression. After Trump “TACO’d” — his word for calling a truce on tariffs — on April 9, Hayes called for “Up Only!” Bitcoin rallied about 21%, Ether and other “selected shitcoins” followed, and Bitcoin dominance slipped from 63% to 59%. Yet even as his proprietary USD Liquidity Index fell roughly 10% from April 9, Bitcoin still rose 12%. Hayes says that divergence was not some structural decoupling, but a temporary distortion created by ETF basis trades and Digital Asset Treasury (DAT) vehicles.
He is particularly blunt about the spot Bitcoin ETF flows that many commentators branded as proof of “institutional adoption.” Looking at BlackRock’s IBIT, Hayes notes that the five largest holders are hedge funds and prop trading desks, which mainly used the ETF as a leg in a basis trade: “They short a CME-listed Bitcoin futures contract vs. buying the ETF to earn the spread between the two.”
When the annualized basis stands “markedly above the Fed Funds rate, hedge funds will pile into the trade,” generating “large and persistent net inflows into the ETF.” That, he argues, “creates the impression, to those who don’t understand the market microstructure, that there is massive interest from institutional investors for Bitcoin exposure when in reality they don’t give a fuck about Bitcoin, they only play in our sandbox for a few extra points over Fed Funds.” As the basis collapsed, those same players “quickly dump their positions,” producing “massive net outflows” and a negative feedback loop with retail.
DATs provided a similar optical illusion. Hayes highlights Strategy (MSTR), which can acquire more Bitcoin when its stock trades at a premium to its underlying holdings, a metric called mNAV. As that premium turned into a discount, its ability to grow BTC holdings cheaply diminished. Together, ETF basis flows and DAT issuance “allowed Bitcoin to rise even though dollar liquidity contracted,” he writes. “But this state of play is over […] Without these flows obscuring the negative liquidity picture, Bitcoin must fall to reflect the current short-term worry that dollar liquidity will contract or not grow as fast as the politicians promised.”
This Will End The Bitcoin Downtrend
From there, Hayes goes back to his core premise that “money is politics.” He says it is now time for President Trump and Treasury Secretary “Buffalo Bill” Bessent “to put up or shut up”: either they deploy the Treasury to “run roughshod over the Fed, create another housing bubble, hand out more stimulus checks,” or they are “a bunch of limp-dick charlatans.”
He draws a direct parallel to 2022, when President Biden and Treasury Secretary Janet Yellen engineered a huge drawdown of the Fed’s reverse repo balances. “Yellen issued more Treasury bills than notes or bonds, which sucked $2.5 trillion out of the Fed’s Reverse Repo Program from 3Q2022 until 1Q2025, which pumped stonks, housing, gold, and crypto.” Hayes says, “I have 100% confidence that [Bessent] will engineer a similar outcome.”
In the near term, however, he is cautious. Hayes acknowledges the bull argument that as the US government normalizes operations after the shutdown, the Treasury General Account can be reduced by $100–150 billion and that the Fed will end quantitative tightening on December 1.
But he points out that “since July approximately $1 trillion of dollar liquidity evaporated based on my index.” Against that backdrop, a $150 billion boost is marginal, and talk of renewed QE remains “just talk” until “Fed whisperer Nick Timiraos” signals otherwise. “The bulls are correct; over time, money printer go Brrrrrr. But first, the markets must retrace the gains since April to better align with the liquidity fundamentals.”
How Hayes Positions His Company
Hayes says he has already adjusted Maelstrom’s positioning. “Over the weekend, I raised our USD stables position in anticipation of lower crypto prices,” even though the fund is still “long as fuck.” The only token he thinks can “outrun the negative dollar liquidity situation in the short-term” is Zcash (ZEC).
“With AI, big tech, and big government, privacy across most sectors of the internet is dead. Zcash and other privacy cryptos using zero-knowledge proof cryptography are humanity’s only chance to fight this new reality.” He argues that it “should offend our sensibilities as disciples of Satoshi” that the third, fourth and fifth largest coins are “a USD-derivative, a do-nothing coin on a do-nothing chain, and CZ’s centralized computer,” and insists “Zcash or a similar type of privacy crypto belongs right below Ethereum.”
The current Bitcoin correction, in Hayes’s reading, is also a warning. “The Bitcoin dive from $125,000 to the low $90,000s whilst the S&P 500 and Nasdaq 100 indices hover around all-time highs tells me that a credit event is brewing.” He sees scope for a 10–20% equity drawdown and a 10-year US yield near 5%. In that stress, “Bitcoin could absolutely drop to $80,000 to $85,000.” But if that forces the Fed and Treasury to “accelerate their money printing capers,” he believes Bitcoin “could zoom towards $200,000 or $250,000 at year end.”
Hayes also expects China to join the next wave of easing once the US clearly accelerates dollar creation. He cites the People’s Bank of China’s recent purchase of government bonds as “the beginning of China QE” and notes Beijing’s anger at the US “stealing” Bitcoin from the Chinese pig butchering scam operator as evidence that Xi Jinping views Bitcoin as a strategic asset. “If both Trump and Xi, leaders of the two largest economies globally, believe that Bitcoin is valuable, why are you not bullish long term?” he asks.
At press time, BTC traded at $90,477.
