BitMEX co-founder Arthur Hayes is standing by his ambitious price target for Bitcoin, predicting the asset will reach $250,000 by the end of the year. During an appearance on the Milk Road podcast, he argued that the recent market dip to $80,600 marked the bottom and that improving global liquidity conditions are set to fuel a rally in risk assets.

Hayes attributed Bitcoin’s recent price decline to a reversal in misunderstood Exchange-Traded Fund (ETF) flows and a significant liquidity drain by the U.S. Treasury. Between July and November, the Treasury raised approximately $1 trillion to refill its general account. This action, combined with the Federal Reserve’s quantitative tightening program, effectively pulled nearly a trillion dollars out of the market.

ETF Inflows Driven by Trades, Not True Demand

A key part of Hayes’s analysis challenges the popular narrative that recent Bitcoin ETF inflows represented a wave of genuine institutional buying. He pointed to data showing that major holders of BlackRock’s IBIT ETF, such as Brevin Howard and Millennium, were not simply taking long positions on Bitcoin.

Instead, Hayes claims these funds were executing basis trades—a strategy that involves buying the spot ETF while simultaneously selling CME futures contracts against it to capture the price difference. When the funding rate collapsed after October 10, these traders unwound their positions by selling the ETF, creating downward pressure. Hayes suggested that retail investors misinterpreted this institutional selling as a loss of confidence, prompting them to sell as well without understanding the underlying trading mechanics.

Liquidity Conditions Set to Improve

Looking ahead, Hayes is bullish because the factors that previously tightened liquidity are now reversing. The Treasury General Account is nearing its target of approximately $850 billion, signaling an end to its aggressive cash raise. More critically, he noted that the Federal Reserve has concluded its quantitative tightening, meaning its balance sheet will remain constant.

According to Hayes, the market has hit a low point on the liquidity chart, and the only direction from here is higher. He also anticipates that future credit creation will be driven by bank lending rather than the Fed, citing discussions from major banks like JP Morgan about potentially lending $1.5 trillion to the industrial sector. Confident in this shifting financial landscape, Hayes remains firm that Bitcoin will hit his $250,000 target by December 31.

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