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Arthur Hayes remains firmly committed to his highly optimistic Bitcoin outlook, insisting that the recent plunge to $80,000 marked the cycle bottom — not the beginning of a prolonged downtrend. Despite market uncertainty and a sharp correction from October highs, the BitMEX co-founder believes Bitcoin still has a clear path toward $200,000–$250,000 before the end of 2025.
During an interview on the Milk Road Show on November 26, Hayes said the violent sell-off was entirely driven by a massive dollar-liquidity drain across global markets. With that liquidity pressure easing, he argues Bitcoin is positioned for a strong rebound once new capital flows begin to surface.
Hayes Says $80,000 Was “The Bottom” After a Trillion-Dollar Liquidity Shock
Hayes framed the entire drop from Bitcoin’s all-time high near $125,000 down to the $80,000 region as a liquidity reset. According to him, the major driver was not a structural weakness in Bitcoin, but rather a trillion dollars being removed from dollar money markets over several months.
His analysis is based on a liquidity index built using Bloomberg data, which tracks changes in Treasury General Account balances, Reverse Repo Facility usage, and Federal Reserve balance sheet trends.
From July to November, both the Treasury and the Federal Reserve drained liquidity simultaneously. Hayes noted that Bitcoin held up surprisingly well during the early part of this drain because ETF inflows and Digital Asset Treasury (DAT) activity temporarily hid the liquidity weakness. As those inflows slowed and reversed, Bitcoin “simply fell to where it should have been.”
Hayes maintains that the worst of the liquidity compression has already occurred, meaning the $80,000 level is likely to stand as the cycle’s floor.
ETF Outflows Were Misread — Not Institutions Dumping Bitcoin
One of Hayes’ strongest points during the interview was the misconception surrounding ETF outflows. Many retail traders saw the negative ETF flow data and assumed major institutional investors were exiting Bitcoin.
But Hayes explained that the largest holders of BlackRock’s IBIT ETF include major financial institutions such as Brevan Howard, Millennium, Goldman Sachs, Avenue Capital, and Jane Street. These players were not accumulating for long-term conviction; they were executing a basis trade, a common arbitrage strategy.
They bought ETF shares, pledged them as collateral, and shorted Bitcoin futures contracts. As long as futures funding rates remained high, this trade generated steady returns. But when funding rates fell in September and October, the spread collapsed.
This forced traders to unwind the strategy:
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Selling ETF shares
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Closing futures positions
This mechanical unwind generated ETF outflows — but did not represent bearish conviction about Bitcoin.
Hayes stressed that retail investors misinterpreted these flows as institutional selling, when in reality they were simply the closing of arbitrage positions.
DAT Activity Also Slowed, Removing an Important Source of Buying
Digital Asset Treasury companies — corporate entities that issue stock or debt to acquire Bitcoin — had also been a significant source of demand when their market value traded above net asset value. Hayes explained that when these stocks traded at a premium, issuing new shares and buying Bitcoin was accretive.
But after Bitcoin’s price correction, these premiums evaporated. Some DATs even began trading at a discount, which removed their ability to issue new securities. In certain cases, it became more profitable to sell Bitcoin and buy back undervalued shares.
This breakdown of the DAT model removed another important liquidity input, contributing to the sharp downside move.
Why Bitcoin Is Struggling to Break Out Above $90,000
Despite the improving liquidity outlook, Bitcoin continues to trade near the $90,000 range. Hayes attributes this stagnation to political uncertainty in the United States, where the market is waiting for confirmation that a large-scale credit expansion will actually materialize.
Although political leaders have spoken about reviving bank lending and supporting industrial investment, markets want to see concrete steps — not just policy talk. Hayes expects the next major expansion of liquidity to come not from the Federal Reserve, but from commercial banks as lending accelerates.
Until the policy direction becomes clearer, Bitcoin may remain range-bound.
Hayes Still Confident in a Massive Move Toward $200,000–$250,000
Even with only weeks left in the year, Hayes is not backing away from his bold year-end target. He believes the liquidity cycle has already turned upward, which historically has been the strongest catalyst for Bitcoin expansions.
“All we know is that the bottom is in, and the path ahead is higher,” he said.
Hayes argues that once new liquidity flows become visible, Bitcoin will likely resume its upward trajectory — potentially with significant acceleration.
