Trump Inauguration Could Coincide With A 'Harrowing Dump' For Crypto, Arthur Hayes Warns

Former BitMEX CEO Arthur Hayes on Wednesday issued a stark warning about a potential "harrowing dump" in cryptocurrency markets around Donald Trump's inauguration on Jan. 20, 2025.

What Happened: Hayes argues that overly optimistic investor expectations for Trump's economic policies will clash with the slow pace of real-world change, leading to a sharp sell-off.

In his latest blog post titled “Trump Truth”, Hayes outlines his outlook for the crypto market as Trump prepares to assume office for his second term.

Hayes believes that while Trump's policies are likely to favor asset price inflation and a weaker U.S. dollar in the long term, immediate results are unlikely.

"The market believes that Trump and his people can immediately achieve economic and political miracles," Hayes wrote. He warns that the crypto market will face a reality check, saying, "I believe the crypto markets will experience a harrowing dump around Trump's January 20th 2025 inauguration day."

Hayes explains that Trump has only one year to implement any significant policy changes before mid-term campaigning begins in late 2025, which will limit his administration's ability to enact meaningful reforms.

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He added that structural economic issues cannot be solved within such a short timeframe, setting up investors for disappointment.

Despite predicting short-term volatility, Hayes remains confident in the broader bull market for cryptocurrencies, particularly Bitcoin BTC/USD.

He believes Trump's policy goals—including weakening the U.S. dollar to reindustrialize America—will ultimately increase the global supply of fiat currency and drive demand for hard assets like Bitcoin.

"Trump Truth shows me the structural deficiencies of the global order… The best way to maximize returns is to own Bitcoin and crypto," he emphasized.

While Hayes acknowledges the risks of timing the market, he outlined his firm Maelstrom's strategy of reducing exposure ahead of the inauguration, with plans to buy back positions during the anticipated sell-off.

"Maelstrom will be lightening up on certain positions in advance, hoping to rebuy some core positions at lower prices sometime in 1H25," he wrote.

What’s Next: Hayes concluded by cautioning traders against underestimating the challenges Trump will face and stressed that, while a near-term correction is likely, he remains committed to long-term crypto investments.

"We are committed to admitting defeat if the bull market steamrolls through January 20th, licking our wounds, and getting back on the bull."

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