Despite initial optimism, Arthur Hayes predicts a market downturn after President Trump takes office. Cryptocurrency markets celebrated Trump's re-election, but the excitement died down overnight after the Federal Reserve announced a lower-than-expected interest rate cut in 2025. However, Hayes remains optimistic about Bitcoin's long-term prospects. He suggests that the EU's financial repression could lead investors to turn to Bitcoin as a safe haven.
Arthur Hayes tackles this issue again in a year-end blog post, and it's a hell of a lot.
If you have about 30 minutes to spare, it's definitely an interesting (and often humorous) read.
But even if you don't, you're in luck – I'm here to spell it out for you.
The crux of Hayes' latest opinion piece is that Inauguration Day will be a good day for Trump as the “sugar” (his words) of the Republican victory begins to wear off…but the market's sharp decline begins. It is said that it will tell you.
Related: EU lawmaker defends Bitcoin reserves, former German finance minister criticizes national crypto policy
Trump will need to navigate a difficult political climate to revolutionize cryptocurrencies
When news of Trump’s re-election spread across media channels in November, the crypto market rejoiced. The momentum reached its peak this week, with BTC topping US$107,000 (A$172,000) amid speculation of a US strategic reserve made up of Bitcoin.
But that euphoria was dashed that week when the US Federal Reserve announced it was likely targeting just two rate cuts in 2025, rather than the most anticipated three.
Market rebound based on failed political commitments is the basis of Hayes' opinion.
Essentially, BitMEX's outspoken founder praises President Trump for being honest about the geopolitical landscape, in what he dubs “The Trump Truth.”
The Trump truths I am referring to are limited to a narrow range of subjects. I'm not talking about whether Trump tells the truth about his penis size, net worth, or golf handicap. Rather, Trump's truth speaks about the actual relationships between various nation-states and the opinions of average American voters who are safely away from the Nazis of political correctness.
Arthur Hayes
And while in the minds of voters this means he's telling the truth about his intentions with cryptocurrencies, Hayes said the situation is much more complex than the community is willing to accept. I believe there is.
Hayes said President Trump has about a year to enact substantive changes to digital asset law before the midterm elections shake up the Senate.
And he believes there will be a “disastrous sell-off” once the market realizes that Trump's ability to enact legislative reform is limited.
Pressure on the EU established to benefit Bitcoin in the long run
However, it's not all bad news.
Hayes acknowledged that he may have been wrong and that the current bull market could continue long after Trump takes office.
Related: Bitwise predicts 2025 Ethereum boom due to wave of RWA tokenization
If so, markets will be set up to take advantage of changes in the global environment.
And despite Hayes' prediction of trouble for cryptocurrencies in mid-January, he still believes Bitcoin will be on a stronger path heading into 2025.
Germany, which has historically led Europe's growth, has stalled. Gross domestic product has been shrinking for more than a year, and the once-thriving manufacturing industry is in turmoil.
The graph below shows that the European Central Bank's balance sheet is shrinking… pic.twitter.com/FkJnysS00J
— Murray Gunn – EWI (@MurrayGunnEWI) December 16, 2024
He said the weakening of the EU economy could force governments to encourage European assets over US assets, further devaluing the EU relative to the US dollar (which prevails at the time of writing). It suggests that there is a sex.
Where do investors turn when there are few options to invest in stocks, bonds, foreign exchange, and real estate markets?
Yes, you guessed it.
Bitcoin.
