Arthur Hayes, co-founder of BitMEX and CIO of Maelstrom, has released a new market note titled 'No Trade Zone,' warning that Bitcoin's near-term outlook is increasingly tied to global liquidity conditions rather than traditional macro indicators. He argues that without policy-driven liquidity injections into banks and credit markets, Bitcoin may stall or even sell off before finding its footing.
Quantity Over Price: The Core Thesis
Hayes framed his outlook around monetary conditions, asking: 'Do you believe the quantity or the price of money is more important when valuing Bitcoin?' He answered with a direct thesis: 'I believe the quantity of money determines the price of Bitcoin, not its price.' This view underpins his broader market framework, which expects Bitcoin to struggle during forced deleveraging and strengthen when policymakers expand credit. He tied that dynamic to geopolitical outcomes involving the Strait of Hormuz, as well as a domestic economic slowdown driven by white-collar job losses. In his view, those pressures could hit credit quality, weigh on banks, and delay any durable crypto rally until authorities supply fresh liquidity.
Geopolitical Tensions and Credit Stress
Hayes wrote: 'Bitcoin might bounce a bit after the situation reverts to the pre-war status quo. However, the AI agentic deflation bomb still ticks below the surface. Until the Fed provides the liquidity needed to plug the black hole in banks' balance sheets caused by consumer credit defaults, Bitcoin will not meaningfully rise.' He added, 'That’s not to say it couldn’t spike to $80,000 to $90,000, but for me putting new units of fiat at risk requires an all-clear from the Fed.' The statement shows he still sees upside potential, but only after broader financial stress is addressed.
Hayes also warned that market stress could produce another sharp Bitcoin selloff before any recovery takes hold. 'As investors de-risk their portfolios because of higher volatility and lower prices, investors sell bitcoin to meet margin calls,' he described, adding: 'Only when things get bad enough will bitcoin rise, as expectations of a bailout become the consensus.' In the most extreme scenario, even a liquidity-fueled rally may not last. 'The rally in bitcoin, inspired by money printing, might be short-lived because the destruction of the Iranian state materially raises the prospect of WW3.' Taken together, the essay presents a conditional forecast: near-term volatility remains high, while any lasting upside still depends on crisis-era money creation.
Waiting for the Fed Balance Sheet Expansion
Hayes emphasized that Bitcoin's next major move hinges on central bank balance sheets. He previously noted that liquidity expansion, currency stress, and deleveraging are the primary drivers for Bitcoin. Currently, the market is in a 'no trade zone,' and investors should remain cautious until the Fed or other authorities explicitly signal liquidity injections. Once a credit crisis forces central banks to unleash massive quantitative easing, Bitcoin could mount a meaningful recovery.