The Federal Reserve Signals a Shift in Policy
The Federal Reserve announced last week that it would slow down the pace of balance sheet reduction, which is expected to ease market liquidity. BitMEX co-founder Arthur Hayes predicted today that Bitcoin will first rise to $110,000, rather than pull back to $76,500, because the Fed is shifting from Quantitative Tightening (QT) to Quantitative Easing (QE) for U.S. Treasuries.
（Background: Arthur Hayes: Bitcoin may have bottomed at $77,000, but the U.S. stock market must continue to decline to force Powell to print money… Hold cash）
（Context: Arthur Hayes: Bitcoin will find support at $70,000! Wait for the stock market crash and Fed rate cuts to “increase positions”）
Fed Maintains Interest Rates
The Federal Reserve (Fed) decided last week to keep interest rates unchanged at 4.25%-4.5%, maintaining expectations for two rate cuts in 2025. It announced that starting in April, it will slow down the balance sheet reduction by lowering the monthly redemption cap for U.S. Treasuries from $25 billion to $5 billion, while keeping the monthly redemption cap for agency bonds and mortgage-backed securities at $35 billion.
Since then, Bitcoin’s price seems to be bottoming out, currently reported at $86,727, with a 7-day increase of 3.6%, and it has risen more than 10% from this month’s low of $76,600. Arthur Hayes asserted last week that Bitcoin may have bottomed at $77,000, but the stock market might still have room to decline, which could pressure the Fed to implement looser policies:
Market Dynamics
“Powell delivered on his promise; QT essentially ends on April 1. To truly push the market into a bull market, the Fed needs to either restore the Supplementary Leverage Ratio (SLR) exemption or restart QE,” said Hayes. “Bitcoin may have bottomed at $77,000? It’s possible, but the stock market may need to endure more pain to fully push Powell towards the Trump camp, so stay flexible and keep enough cash on hand.”
Arthur Hayes Predicts Bitcoin Surge
After the weekend, Arthur Hayes tweeted again today (March 24), predicting that Bitcoin will first rise to $110,000:
I bet Bitcoin hits $110k before it retests $76.5k. Why? The Fed is going from QT to QE for treasuries. And tariffs don’t matter because “transitory inflation,” Jay Powell told me so. I’ll expound on that in my next essay, that’s the TLDR for your TikTok peanut brain.
— Arthur Hayes (@CryptoHayes) March 24, 2025
Shift in Perspective
Previously, Arthur Hayes was relatively pessimistic about Bitcoin’s trajectory. Since last month, he had repeatedly warned that Bitcoin might plummet to the $70,000-$75,000 range in Q1 or Q2, but a small financial crisis would force the Fed to restart its money printing, pushing Bitcoin to a historical high of $250,000 by the end of the year. However, the Fed’s recent actions seem to have significantly altered his viewpoint.
As the Fed slows down balance sheet reduction, it effectively reduces the liquidity being withdrawn from the market, essentially making it akin to a halt of QT. With the redemption cap for U.S. Treasuries slashed from $25 billion to $5 billion, the Fed is essentially starting to “stabilize” demand in the bond market. This kind of operation will lower yields and stabilize risk asset valuations, which the market naturally interprets as a signal of easing.
In Arthur Hayes’s view, high-sensitivity assets like Bitcoin are extremely sensitive to shifts in liquidity, and the influx of capital is merely a matter of time. Thus, while the Fed’s actions may not be traditional QE, the effect is similar, allowing the market to respond favorably.
