Arthur Hayes predicts a significant decline in the virtual currency market around the time Trump takes office as President in January 2025
Arthur Hayes, former CEO of BitMEX, predicts a significant drop in the cryptocurrency market around the time of President Donald Trump's inauguration on January 20, 2025. Mr. Hayes, who currently runs a family office called Maelstrom, maintains that market expectations are high for swift regulation. Changes under the Trump administration will be disappointing. In a blog post, he explained that President Trump has limited time to make significant changes before attention shifts to the 2026 midterm elections.
Cryptocurrency markets soared following Trump's election victory in November, with Bitcoin rising more than 50%. Many investors expect Mr. Trump, who has promised to introduce a crypto-friendly regulatory framework, to make sweeping changes. These expectations are based on President Trump's pledge to create a national Bitcoin reserve and overhaul cryptocurrency regulation. But Hayes is skeptical, arguing that Trump won't be able to deliver on those promises anytime soon. He noted that meaningful policy changes will likely take longer than markets expect due to the political realities of the situation.
Hayes warns that the gap between investor expectations and political reality will cause a significant decline in the crypto market. “Markets will soon wake up to the reality that President Trump has at most a year to implement policy changes,” Hayes wrote. He predicts a “disastrous collapse” in crypto prices, starting around the time Trump takes office.
As a result of this forecast, Hayes' Maelstrom Fund plans to reduce its holdings in anticipation of a price decline in early 2025. He explained that market enthusiasm is not matched by swift regulatory action, which could lead to investor regret. However, Hayes acknowledged that his strategy could backfire if the market continues its upward trajectory. He emphasized that if the bull market continues, Maelstrom is prepared to correct the market and repurchase.
Despite Hayes' cautious outlook, some analysts, including Matrixport, expect Bitcoin to get off to a strong start in 2025. They believe that President Trump's crypto-friendly policies could lead to higher prices. Still, Hayes remains cautious, noting that crypto markets are often volatile and could lead to sharp corrections once the initial excitement over Trump's inauguration wears off.
Hayes' comments highlight the uncertainty over President Trump's ability to follow through on his crypto promises in the near term, as the market focuses on regulatory changes. He predicts that market optimism could turn to harsh reality in the coming months.
