Bitcoin may remain under pressure until the Federal Reserve or banks begin expanding their balance sheets, BitMEX co-founder and Maelstrom CIO Arthur Hayes said. A measure of dollar liquidity has risen 4.49% so far this year, but that increase has not changed Hayes’s near-term view.
Dollar liquidity gauge remains below its October peak
Hayes posted his comments on X on November 2, alongside a chart of the .USDLIQ dollar liquidity gauge. The measure stood at 32.71 million, up 4.49% from the start of the year but about 0.6% below its October peak of 32.90 million. It has recovered from its year-start level, but has yet to move above that earlier high.
“Dollar liquidity is recovering,” Hayes wrote, while predicting that Bitcoin would remain weak until the Fed and/or banks started expanding their balance sheets. An increase in the liquidity gauge is not the same as balance-sheet expansion. The latter generally involves central banks or lenders buying assets or extending credit, adding funds to the financial system. Hayes views that expansion as an important condition for Bitcoin to strengthen.
Hayes’s recent calls and portfolio moves
On October 15, Hayes recommended taking long positions in Bitcoin and Ethereum, citing the possibility of a multi-trillion-dollar bailout following the boom in AI data centers. Days later, Maelstrom’s directional portfolio sold about $22.28 million in crypto assets. The portfolio primarily holds positions that bet directly on price movements.
The earlier bullish view and subsequent reduction in holdings mark a change in the timing of Hayes’s recent commentary. His latest remarks put the focus back on the balance sheets of the Fed and banks. The available information does not specify what drove the liquidity gauge’s rise or when Hayes expects Bitcoin to strengthen. For market participants, the gauge’s year-to-date gain and its position below the October high are separate from the balance-sheet expansion he identifies as a condition for a stronger Bitcoin market.