{"id":113863,"date":"2025-11-18T09:00:59","date_gmt":"2025-11-18T09:00:59","guid":{"rendered":"https:\/\/mycryptomania.com\/?p=113863"},"modified":"2025-11-18T09:00:59","modified_gmt":"2025-11-18T09:00:59","slug":"why-is-bitcoin-price-crashing-arthur-hayes-isnt-surprised","status":"publish","type":"post","link":"https:\/\/mycryptomania.com\/?p=113863","title":{"rendered":"Why Is Bitcoin Price Crashing? Arthur Hayes Isn\u2019t Surprised"},"content":{"rendered":"

In his latest Substack essay \u201cSnow Forecast,\u201d published<\/a> November 17, 2025, Arthur Hayes argues that Bitcoin\u2019s sharp drawdown from its October all-time high is a straightforward consequence of tightening dollar liquidity once derivative-driven \u201cfake flows\u201d into Bitcoin have dried up. For Hayes, Bitcoin is \u201cthe free-market weathervane of global fiat liquidity\u201d that trades on expectations of future money supply rather than day-to-day headlines.<\/p>\n

Why Is The Bitcoin Price Down?<\/h2>\n

He looks back to the \u201cUS Liberation Day\u201d turmoil on April 2, 2025, when aggressive tariff moves from the Trump administration initially sparked fears of a depression. After Trump \u201cTACO\u2019d\u201d \u2014 his word for calling a truce on tariffs \u2014 on April 9, Hayes called for \u201cUp Only!\u201d Bitcoin rallied about 21%, Ether and other \u201cselected shitcoins\u201d followed, and Bitcoin dominance slipped from 63% to 59%. Yet even as his proprietary USD Liquidity Index fell roughly 10% from April 9, Bitcoin still rose 12%. Hayes says that divergence was not some structural decoupling, but a temporary distortion created by ETF basis trades and Digital Asset Treasury (DAT) vehicles<\/a>.<\/p>\n

He is particularly blunt about the spot Bitcoin ETF flows that many commentators branded as proof of \u201cinstitutional adoption.\u201d Looking at BlackRock\u2019s IBIT<\/a>, Hayes notes that the five largest holders are hedge funds and prop trading desks, which mainly used the ETF as a leg in a basis trade: \u201cThey short a CME-listed Bitcoin futures contract vs. buying the ETF to earn the spread between the two.\u201d<\/p>\n

When the annualized basis stands \u201cmarkedly above the Fed Funds rate, hedge funds will pile into the trade,\u201d generating \u201clarge and persistent net inflows into the ETF.\u201d That, he argues, \u201ccreates the impression, to those who don\u2019t understand the market microstructure, that there is massive interest from institutional investors for Bitcoin exposure when in reality they don\u2019t give a fuck about Bitcoin, they only play in our sandbox for a few extra points over Fed Funds.\u201d As the basis collapsed, those same players \u201cquickly dump their positions,\u201d producing \u201cmassive net outflows\u201d and a negative feedback loop with retail.<\/p>\n

DATs provided a similar optical illusion. Hayes highlights Strategy (MSTR)<\/a>, which can acquire more Bitcoin when its stock trades at a premium to its underlying holdings, a metric called mNAV. As that premium turned into a discount, its ability to grow BTC holdings cheaply diminished. Together, ETF basis flows and DAT issuance \u201callowed Bitcoin to rise even though dollar liquidity contracted,\u201d he writes. \u201cBut this state of play is over [\u2026] Without these flows obscuring the negative liquidity picture, Bitcoin must fall to reflect the current short-term worry that dollar liquidity will contract or not grow as fast as the politicians promised.\u201d<\/p>\n

This Will End The Bitcoin Downtrend<\/h2>\n

From there, Hayes goes back to his core premise that \u201cmoney is politics.\u201d He says it is now time for President Trump and Treasury Secretary \u201cBuffalo Bill\u201d Bessent \u201cto put up or shut up\u201d: either they deploy the Treasury to \u201crun roughshod over the Fed, create another housing bubble, hand out more stimulus checks,\u201d or they are \u201ca bunch of limp-dick charlatans.\u201d<\/p>\n

He draws a direct parallel to 2022, when President Biden and Treasury Secretary Janet Yellen engineered a huge drawdown of the Fed\u2019s reverse repo balances. \u201cYellen issued more Treasury bills than notes or bonds, which sucked $2.5 trillion out of the Fed\u2019s Reverse Repo Program from 3Q2022 until 1Q2025, which pumped stonks, housing, gold, and crypto.\u201d Hayes says, \u201cI have 100% confidence that [Bessent] will engineer a similar outcome.\u201d<\/p>\n

In the near term, however, he is cautious. Hayes acknowledges the bull argument that as the US government normalizes operations after the shutdown, the Treasury General Account can be reduced by $100\u2013150 billion and that the Fed will end quantitative tightening on December 1.<\/p>\n

But he points out that \u201csince July approximately $1 trillion of dollar liquidity evaporated based on my index.\u201d Against that backdrop, a $150 billion boost is marginal, and talk of renewed QE remains \u201cjust talk\u201d until \u201cFed whisperer Nick Timiraos\u201d signals otherwise. \u201cThe bulls are correct; over time, money printer go Brrrrrr. But first, the markets must retrace the gains since April to better align with the liquidity fundamentals.\u201d<\/p>\n

How Hayes Positions His Company<\/p>\n

Hayes says he has already adjusted Maelstrom\u2019s positioning. \u201cOver the weekend, I raised our USD stables position in anticipation of lower crypto prices,\u201d even though the fund is still \u201clong as fuck.\u201d The only token he thinks can \u201coutrun the negative dollar liquidity situation in the short-term\u201d is Zcash (ZEC).<\/p>\n

\u201cWith AI, big tech, and big government, privacy across most sectors of the internet is dead. Zcash and other privacy cryptos using zero-knowledge proof cryptography are humanity\u2019s only chance to fight this new reality.\u201d He argues that it \u201cshould offend our sensibilities as disciples of Satoshi\u201d that the third, fourth and fifth largest coins are \u201ca USD-derivative, a do-nothing coin on a do-nothing chain, and CZ\u2019s centralized computer,\u201d and insists \u201cZcash or a similar type of privacy crypto belongs right below Ethereum<\/a>.\u201d<\/p>\n

The current Bitcoin correction, in Hayes\u2019s reading, is also a warning. \u201cThe Bitcoin dive from $125,000 to the low $90,000s whilst the S&P 500 and Nasdaq 100 indices hover around all-time highs tells me that a credit event is brewing.\u201d He sees scope for a 10\u201320% equity drawdown and a 10-year US yield near 5%. In that stress, \u201cBitcoin could absolutely drop to $80,000 to $85,000.\u201d But if that forces the Fed and Treasury to \u201caccelerate their money printing capers,\u201d he believes Bitcoin \u201ccould zoom towards $200,000 or $250,000 at year end.\u201d<\/p>\n

Hayes also expects China to join the next wave of easing once the US clearly accelerates dollar creation. He cites the People\u2019s Bank of China\u2019s recent purchase of government bonds as \u201cthe beginning of China QE\u201d and notes Beijing\u2019s anger at the US \u201cstealing\u201d Bitcoin from the Chinese pig butchering scam<\/a> operator as evidence that Xi Jinping views Bitcoin as a strategic asset. \u201cIf both Trump and Xi, leaders of the two largest economies globally, believe that Bitcoin is valuable, why are you not bullish long term?\u201d he asks.<\/p>\n

At press time, BTC traded at $90,477.<\/p>","protected":false},"excerpt":{"rendered":"

In his latest Substack essay \u201cSnow Forecast,\u201d published November 17, 2025, Arthur Hayes argues that Bitcoin\u2019s sharp drawdown from its October all-time high is a straightforward consequence of tightening dollar liquidity once derivative-driven \u201cfake flows\u201d into Bitcoin have dried up. For Hayes, Bitcoin is \u201cthe free-market weathervane of global fiat liquidity\u201d that trades on expectations […]<\/p>\n","protected":false},"author":0,"featured_media":113864,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-113863","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-discovery"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/113863"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=113863"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/113863\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/media\/113864"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=113863"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=113863"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=113863"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}