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In a new essay published on Monday, Arthur Hayes—renowned digital asset investor and former CEO of BitMEX—contends that the crypto market is poised to rally strongly in the first quarter of 2025 before topping out sometime in “mid to late March.” Hayes’s latest essay, titled “Sasa,” delves deep 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 essay by setting a vivid scene from Japan’s Hokkaido ski resorts, likening dangerous backcountry conditions caused by insufficient snow cover over sharp bamboo grass (sasa) to potential market obstacles that could cut short crypto rallies. He observes that 2025 has kicked off amid robust snowfall in Hokkaido—an apt metaphor for what he sees as a liquidity “dumping” that could propel digital asset prices upward. Nonetheless, he warns that the political and fiscal environment in the United States may introduce unexpected hazards.
Why March Could Mark The Next Peak For Crypto
“As we begin 2025, the question on crypto investors’ minds is whether the Trump pump can continue,” Hayes writes, referencing the initial optimism surrounding President Donald Trump’s second term. While Hayes believes “the high expectations for policy action out of the Trump camp set up the market for disappointment,” he maintains that any short-term negativity could be offset by a powerful “dollar liquidity impulse.”
Hayes underscores that the Fed’s RRP has been critical for Bitcoin’s price trajectory. Since the third quarter of 2022, the facility’s unwinding has correlated positively with crypto and equities prices.
“Bitcoin bottomed in Q3 2022 when the Fed’s Reverse Repo Facility (RRP) reached its zenith,” he explains, noting that US Treasury Secretary Janet “Bad Gurl” Yellen facilitated a shift from issuing longer-dated coupon bonds to issuing shorter-dated T-bills. This approach, he argues, effectively drained more than $2 trillion from the RRP, injecting liquidity into global markets.
Now, with the RRP falling to almost zero, the Fed has “belatedly changed the policy rate of the RRP” to make it less attractive. Hayes points out that it still represents a potential $237 billion injection into markets once the remaining RRP funds move into higher-yielding Treasury bills. Meanwhile, ongoing quantitative tightening (QT) removes $60 billion per month, totaling $180 billion between January and March. Netting both factors yields a $57 billion injection over the quarter.
Another major focus in Hayes’s thesis is the Treasury General Account. As debt ceiling negotiations loom, the Treasury’s inability to issue new debt means it can only cover expenses by spending down the TGA—an action that releases liquidity.
“Because the aggregate amount of debt cannot rise until the US Congress increases the debt ceiling, the Treasury can only spend funds from its checking account, the TGA,” Hayes writes, noting that the balance stands at around $722 billion.
He estimates that without a debt ceiling resolution, the TGA could be exhausted by May or June. For crypto markets, the crux of the matter is the timescale for a deal in Congress. The essay highlights Trump’s narrow majority and the likelihood that Republicans who position themselves as fiscally conservative will not grant quick or easy consent. Democrats, Hayes adds, are unlikely to facilitate enabling more spending for a president they oppose—further fueling legislative brinkmanship.
According to Hayes’s calculations, TGA drawdowns could release an additional $555 billion from January through March. If combined with the $57 billion net liquidity from the Fed’s RRP and QT adjustments, total dollar liquidity could rise by as much as $612 billion in the first quarter.
Hayes zeroes in on March as the critical juncture—when this liquidity surge might begin to wane and expectations for new federal spending or pro-crypto legislation from the Trump administration may not materialize on schedule.
“I believe I answered the question I posed at the outset. That is, the sasa of a letdown by team Trump on his proposed pro-crypto and pro-business legislation can be covered by an extremely positive dollar liquidity environment,” he states, before concluding that peak liquidity could subside quickly once the market anticipates the debt ceiling’s resolution and the subsequent refilling of the TGA.
From a historical lens, Hayes cites Bitcoin’s price action in 2024, which peaked in mid-March around $73,000, then drifted sideways and tumbled just before the April 15 tax deadline. The reasoning, he suggests, is straightforward: as soon as TGA spending has run its course, the net positive liquidity picture reverts to neutral or negative, leaving risk assets vulnerable.
While Hayes acknowledges that Chinese credit expansion, Bank of Japan interest rate policies, and the Trump administration’s potential dollar devaluation strategy against other major currencies or gold could upend his timeline, he trusts that RRP and TGA mechanics are reliable near-term gauges. Crucially, these twin sources of liquidity appear powerful enough to overshadow any disappointment about Trump’s policies until at least the end of March.
“None of these major macroeconomic issues can be known a priori, but I have confidence in the math behind how the RRP and TGA balances will change over time,” he says, underscoring that the surging crypto and stock markets since late 2022 align with the massive drain in the RRP.
Hayes concludes by suggesting that, historically, markets often provide significant selling opportunities in the first quarter. By springtime, investors might want to take profits and “chill on the beach” while waiting for improved liquidity conditions to re-emerge in the second half of the year. “Right on schedule, just like almost every other year, it will be time to sell in the late stages of the first quarter,” Hayes concludes.
At press time, Bitcoin traded at $101,344.
