Bitcoin’s price volatility has been a hot topic in the investment world, particularly after the cryptocurrency experienced a significant drop of nearly 8% in value throughout 2025. Despite the gloomy outlook of last year, Arthur Hayes, co-founder of BitMEX and a recognized figure in the crypto investment community, expressed a contrarian view: he asserts that Bitcoin’s lackluster performance is a precursor to a robust rebound in 2026.
In a recent essay titled “Bitcoin’s Lousy 2025,” Hayes contends that the cryptocurrency did precisely what it was meant to do by tracking dollar liquidity downward. “Bitcoin performed as to be expected, like utter dog shit,” he remarked, cautioning investors against misinterpreting the digital asset’s struggles. He emphasizes that Bitcoin’s underwhelming year was rooted in liquidity dynamics rather than a failure of its long-term value proposition.
Looking forward, Hayes identifies three critical channels that could potentially restore liquidity and positively influence Bitcoin’s value in 2026. The first mechanism is the Federal Reserve’s newly introduced Reserve Management Purchases (RMP) program, which is projected to inject at least $40 billion into the economy monthly, following a period of quantitative tightening that saw the Fed’s balance sheet bottoming out in December.
The second channel involves a renewed willingness from commercial banks to lend. Hayes highlighted JPMorgan’s recent launch of a substantial $1.5 trillion loan facility aimed at government-backed businesses, indicating a shift in banking dynamics. He noted that “when a bank issues a loan, it creates a deposit, which creates money ex nihilo,” thereby increasing overall money supply.
The third catalyst is related to the housing market, where the actions of Fannie Mae and Freddie Mac are expected to deploy $200 billion for purchasing mortgage-backed securities. This initiative is anticipated to reduce mortgage rates, allowing Americans to borrow against their home equity, which could create a wealth effect as the nation approaches the November elections.
With Bitcoin’s value expected to rally, Hayes has set an ambitious target of over $200,000 by March. He is so confident in this prediction that he plans to increase his exposure to Bitcoin through leveraged positions in Strategy and Metaplanet, both of which are currently trading at two-year lows in relation to Bitcoin prices. “If Bitcoin can retake $110,000, investors will get the itch to go long Bitcoin through these vehicles,” he explained, noting the inherent leverage that could lead to substantial gains.
In summary, Hayes posits a straightforward thesis: Bitcoin’s downturn was linked to dollar liquidity, and as liquidity begins to expand, so too should the price of Bitcoin. His bullish outlook suggests that a significant turnaround could be on the horizon, encouraging investors to remain optimistic about the cryptocurrency’s future potential.
