Image credit: The Byteline

While many cryptocurrency market analysts predict bullish trends following President-elect Donald Trump’s January 2025 inauguration, BitMEX co-founder Arthur Hayes has issued a stark warning. Hayes cautions that high expectations for immediate crypto-friendly policy changes under Trump could lead to market volatility, particularly a sharp sell-off in early 2025.

In his blog post, “Trump Truth,” Hayes outlined his belief that the market is overly optimistic about the speed and scope of anticipated crypto policy changes.

He noted that while Trump’s administration has signaled support for cryptocurrency, the reality of enacting such policies could take much longer than investors expect.

“The market believes that Trump and his people can immediately achieve economic and political miracles,” Hayes wrote, adding that this disconnect between expectations and practical timelines could spur a significant sell-off.

Hayes predicted a “harrowing dump” in cryptocurrency prices around Trump’s inauguration before the market transitions into a strong recovery phase later in 2025, which he termed a “crack-up-boom phase.”

His family office investment fund, Maelstrom, plans to reduce certain positions in anticipation of lower prices during the first half of the year. Hayes emphasized his strategy of selling early to rebuy at better prices, stating, “We are committed to admitting defeat if the bull market steamrolls through Jan. 20, licking our wounds, and getting back on the bull. I will be buying dips and rips.”

Cryptocurrency markets have surged since Trump’s election victory in November, with Bitcoin surpassing $100,000 in December 2024 for the first time in history.

Market optimism has been fueled by Trump’s crypto-friendly rhetoric, with analysts projecting that his policies could bring Bitcoin and decentralized finance further into the mainstream. Singapore-based crypto platform Matrixport has forecasted a “strong start” for Bitcoin in 2025, encouraging investors to accumulate more.

However, Hayes is not alone in anticipating bearish conditions in early 2025. Market rumors suggest that MicroStrategy, a major Bitcoin holder, may enter a blackout period in January, pausing share and bond issuance used to purchase BTC. Such a move could temporarily dampen market sentiment.

Hayes’ cautious outlook underscores the uncertainty surrounding the intersection of politics and cryptocurrency, highlighting the potential for short-term volatility despite long-term bullish trends.

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