Arthur Hayes doubles down on $250K Bitcoin call, says liquidity and ETF dynamics mark $80.6K bottom
Arthur Hayes is standing firmly by his ultra-bullish outlook for Bitcoin, insisting the leading cryptocurrency is on track to hit $250,000 by the end of 2025 and that the recent drop to around $80,600 marked the cycle low.
Speaking on the Milk Road podcast, the BitMEX co‑founder argued that the macro environment for risk assets has quietly flipped from a headwind to a tailwind as dollar liquidity bottoms out, while misunderstood flows around spot Bitcoin ETFs amplified the recent sell‑off but did not reflect real institutional capitulation.
ETF flows weren’t “institutions going all‑in”
Hayes pushed back against the popular idea that strong inflows into U.S. spot Bitcoin ETFs earlier in the year were a sign of long‑term institutional conviction that then vanished when prices corrected.
Citing Bloomberg holdings data for BlackRock’s IBIT ETF, he pointed out that the largest positions are held by trading powerhouses such as Brevan Howard, Goldman Sachs, Millennium, Jane Street and Avenir. Those names, he stressed, are not the type of investors that simply buy Bitcoin to hold for years.
According to Hayes, these firms were largely engaged in basis trades: they bought the spot ETF units and simultaneously shorted Bitcoin futures on the CME. The goal of this strategy is to capture small, relatively low‑risk profits from the pricing gap between spot and futures markets, not to build directional exposure to Bitcoin itself.
When funding rates and basis spreads compressed after October 10, the trade stopped being attractive. As a result, these desks unwound their positions, selling the ETF shares and covering their futures shorts. On‑chain and ETF flow data made it look like “institutions loved Bitcoin in the summer and dumped it in the fall,” Hayes said, but in his view that narrative is misleading.
Retail traders, he argued, misinterpreted the reversal of ETF flows as a sign that big players had lost faith in Bitcoin, prompting them to panic‑sell. In reality, he believes it was simply the mechanical unwinding of a popular arbitrage trade.
Liquidity drain from the Treasury and the Fed
Hayes traced the sharp correction from around $125,000 down to the $80,000 area to a combination of these ETF dynamics and a significant squeeze in dollar liquidity caused by U.S. government policy.
After the U.S. debt ceiling standoff was resolved, the Treasury Department set about rebuilding its cash balance in the Treasury General Account (TGA). From July through November, the Treasury raised roughly $1 trillion by issuing bills and bonds, gradually refilling its checking account.
That process, Hayes pointed out, effectively pulled about $1 trillion out of dollar money markets. At the same time, the Federal Reserve was still running its quantitative tightening (QT) program, shrinking its balance sheet by allowing Treasuries and mortgage‑backed securities to roll off without reinvestment.
Taken together, the Treasury’s aggressive issuance and the Fed’s QT drained close to a trillion dollars in liquidity from the financial system. In Hayes’ framework, that kind of liquidity contraction tends to weigh heavily on risk assets such as tech stocks and Bitcoin, making it much harder for prices to sustain new highs.
“Bottomed on the liquidity chart”
The crucial shift, in Hayes’ view, is that this liquidity squeeze is now largely over. The Treasury General Account has climbed to around $900 billion, hovering near its target level of roughly $850 billion. More importantly, the Fed has stepped back from further balance‑sheet reduction.
“The balance sheet will be kept constant,” Hayes said, describing this as a de facto end to QT. If the Fed is no longer shrinking its holdings and the Treasury is no longer aggressively rebuilding its cash buffer, the net effect is that the worst of the liquidity drain is behind us.
“We are essentially bottomed on the liquidity chart and the direction in the future is higher,” he argued. For Bitcoin, which has historically thrived during periods of expanding dollar liquidity, that shift forms a key pillar of his $250,000 price target.
Why Hayes thinks $80.6K was the cycle low
Putting these moving pieces together, Hayes frames the drop to roughly $80,600 as a confluence of temporary forces rather than the start of a deeper bear market. ETF basis‑trade unwinds created forced selling pressure, while the liquidity vacuum from QT and TGA refilling removed natural buyers from the system.
With those pressures now easing or reversing, he believes that the market has already printed its local bottom. In his view, the sell‑off flushed out over‑leveraged traders and weak hands, while long‑term fundamentals improved in the background.
By calling $80.6K “the bottom,” Hayes is staking out a clear line: from here to the end of 2025, he expects higher highs driven by easier dollar conditions, growing adoption and an eventual recognition by market participants that liquidity is once again expanding.
Looking ahead to 2026: bank credit as the next driver
While his $250,000 forecast is focused on the end of 2025, Hayes is already looking beyond that horizon to what could sustain risk assets further into 2026. He expects the next leg of dollar liquidity growth to be driven not primarily by the Fed, but by the banking sector.
He highlighted that major institutions such as JP Morgan have floated plans for as much as $1.5 trillion in lending to the industrial sector. As this credit flows into the real economy, it effectively creates new money, adding another layer of liquidity on top of a Fed balance sheet that has stopped shrinking.
“Once we actually start to see things actually happen, then we’ll start to see people price a bigger forward on where this dollar liquidity situation is,” Hayes said. In other words, if markets recognize that both public and private credit creation are trending higher, they may re‑rate risk assets upward in anticipation.
How this thesis fits into Bitcoin’s broader macro story
Hayes’ view rests on a long‑standing relationship: Bitcoin tends to do best when real interest rates are low or falling and when liquidity is expanding. In those environments, investors are more willing to move further out on the risk curve in search of returns, and Bitcoin benefits as a high‑beta asset with a compelling narrative.
The combination of a paused QT program, a stabilized TGA and an eventual upswing in bank lending fits neatly into that macro pattern. Even if the Fed does not cut rates aggressively, simply moving from “liquidity drain” to “neutral or modestly positive” may be enough, in his view, to propel Bitcoin to new heights.
For investors trying to make sense of conflicting headlines about rate cuts, inflation and recession risks, Hayes’ framework offers one simple anchor: follow the direction of net dollar liquidity. If that is bottoming and turning up, Bitcoin’s structural bull case, in his opinion, remains intact.
What could go wrong with the $250K call?
Hayes’ conviction does not mean the path to $250,000 will be smooth or guaranteed. Several factors could challenge his thesis.
If inflation were to re‑accelerate sharply, the Fed could be forced back into a more hawkish stance, potentially reviving QT or keeping rates higher for longer than markets expect. A renewed push to reduce the balance sheet would undercut one of Hayes’ core pillars: the notion that the liquidity drain has ended.
On the ETF side, if regulators or exchanges made structural changes that reduced the profitability of basis trades or disrupted derivatives markets, the dynamics of institutional participation could shift again in unpredictable ways. And a severe global recession could trigger broad de‑risking across all asset classes, including Bitcoin, regardless of the long‑term liquidity trend.
Still, Hayes appears comfortable with these risks, suggesting they are outweighed by the secular drivers of adoption, the maturing of crypto market infrastructure and the macro need for new speculative outlets in an era of heavy fiscal spending.
Implications for retail and institutional investors
For retail investors, Hayes’ commentary is a reminder to look beyond surface‑level ETF inflow charts and price action. Understanding whether flows are driven by long‑term buyers or short‑term arbitrage strategies can dramatically change how one interprets sudden reversals.
His analysis also underscores the importance of tracking broader macro indicators: the size of the Fed’s balance sheet, the pace of Treasury issuance, the level of the TGA and the trajectory of bank lending. These are not traditionally on the radar of everyday crypto traders, yet they may be decisive for Bitcoin’s medium‑term path.
Institutional players, meanwhile, may see Hayes’ thesis as validation that Bitcoin is increasingly intertwined with the traditional financial system. The very fact that sophisticated funds can execute complex basis trades through regulated ETFs and CME futures signals that Bitcoin has stepped firmly into the realm of mainstream macro assets.
A bold deadline: December 31, 2025
Hayes is not merely forecasting “higher prices” at some undefined future date. He has tied his prediction to a clear deadline: he expects Bitcoin to reach $250,000 by December 31, 2025.
That specificity leaves little room for ambiguity. If his liquidity‑driven framework plays out as expected, he believes the market has enough time to digest the end of QT, absorb the impact of Treasury policy, and start pricing in an oncoming wave of bank‑driven credit creation.
Whether or not Bitcoin actually touches $250,000 by that date, Hayes’ argument provides a structured way to think about the intersection of macro liquidity, institutional behavior and crypto market structure. For now, in his eyes, the combination of an $80.6K bottom and a looming liquidity upswing sets the stage for the next major chapter in Bitcoin’s boom‑and‑bust history.