The interplay between monetary policy and digital assets is becoming increasingly clear as Bitcoin continues to mirror central bank liquidity decisions. While traditional financial markets react predictably to Federal Reserve policies, crypto markets amplify these effects, potentially leading to large price swings when policy changes.

Arthur Hayes: Bitcoin Could Hit $250,000

Arthur Hayes, co-founder of BitMEX and Chief Information Officer of Maelstrom, has made a bold prediction that Bitcoin could hit $250,000 by the end of 2025 if the Fed adopts quantitative easing (QE). In an April 1 Substack article titled “The BBC,” Hayes argued that the Bitcoin market is largely driven by expectations of fiat liquidity.

Hayes’ analysis suggests that if the Fed were to switch from quantitative tightening (QT) to QE on Treasury bonds, Bitcoin would have hit a local low of $76,500 last month and could now enter a strong rally, heading towards $250,000 by the end of 2025. He also noted that if he had to choose between Bitcoin reaching $76,500 or $110,000 first, he would bet on $110,000, based on the performance of gold under similar economic conditions.

Fed’s Moves and Their Impact on Bitcoin

On April 1, the Fed reduced its monthly Treasury bond sales cap from $25 billion to $5 billion, while keeping its mortgage-backed securities (MBS) sales cap at $35 billion. Fed Chairman Jerome Powell revealed in his February Monetary Policy Report that excess MBS principal payments could be reinvested in Treasury bonds, helping to maintain the size of the Fed’s balance sheet. Hayes said this is Treasury QE and will boost Bitcoin’s price significantly.

Professional Predictions

Arthur Hayes is not alone, many other experts agree with the optimistic outlook for Bitcoin:

Tim Draper: The venture capitalist maintains his prediction that Bitcoin will reach $250,000 by the end of 2025, citing a reduced supply after the halving event and increased institutional demand.

Plan B: This analyst believes Bitcoin will outperform gold this cycle due to its double scarcity. His model estimates that Bitcoin could range from $250,000 to $1 million, with a “conservative” prediction of $300,000.

Robert Kiyosaki: The author of “Rich Dad, Poor Dad” also predicts that Bitcoin could hit $250,000 by 2025.

Matthew Sigel (VanEck): This analyst has a lower prediction of around $180,000.

Market Sentiment and the Likelihood of Reaching $250,000

Despite many experts making optimistic predictions, market sentiment remains divided. Data from Polymarket shows that only 9% of traders believe Bitcoin will reach $250,000 by the end of 2025, while 60% expect the price to peak at $110,000.

Currently, Bitcoin is still experiencing strong volatility. The cryptocurrency is down 23% over the past month and is trading around $84,640. However, on-chain metrics show that institutional investors (Bitcoin Whales) are accumulating more, along with inflows into Bitcoin ETFs.

History also shows that Bitcoin often rallies after accumulation by large investors. Therefore, if monetary policy continues to support liquidity, Bitcoin could position itself to break out to higher prices.

Conclusion

Arthur Hayes’ prediction not only presents an ambitious price target, but also reflects Bitcoin’s growing integration with the traditional financial system. The Fed’s monetary policy shift, the growing involvement of institutions, and Bitcoin’s fundamentals will determine whether the cryptocurrency will reach record highs in the future.