Bitcoin Ready For $250,000 As ETF Basis Trade Dies, Says Arthur Hayes

Overview

Arthur Hayes, the co-founder of BitMEX, asserts that Bitcoin’s recent dip to $80,000 signals the end of a liquidity-driven reset rather than the beginning of a bear market. He believes that the structural forces that previously pressured Bitcoin are now reversing, indicating a potential upward trajectory for the cryptocurrency.

Key Developments

In a Milk Road Show episode recorded on November 26 and released on November 27, Hayes explained his perspective on the recent movements in Bitcoin’s price. He suggested that the much-anticipated US spot ETF “institutional bid” was primarily a leveraged basis trade that has now concluded. As US dollar liquidity appears to have reached its lowest point, Hayes maintains that the $80,000 dip represents a bottom for Bitcoin.

Hayes expressed confidence in a supportive liquidity environment, indicating that the conditions are favorable for Bitcoin to rise. He reiterated his belief in a significant price increase, targeting a range of $200,000 to $250,000 by year-end. He emphasized that his position remains long on Bitcoin regardless of the outcome.

During the discussion, Hayes critiqued the ETF flow charts that misled retail investors in the spring and summer. He pointed out that the largest holders of BlackRock’s iShares Bitcoin Trust were not simply long-only investors but engaged in a standard basis trade. This involved purchasing the ETF, using it as collateral, and shorting CME futures, generating a return on investment.

The dynamics shifted following an October liquidation cascade that caused the futures basis to collapse. This event forced the liquidation of positions and resulted in net ETF flows changing from inflows to outflows, which retail investors misinterpreted as institutional bearishness.

Hayes identified a second contributing factor to Bitcoin’s recent struggles: listed digital asset treasury (DAT) companies that issue stock or debt to acquire Bitcoin. When these vehicles traded at net asset value or a discount, new issuance became less viable, leading some companies to sell Bitcoin to repurchase shares.

Macro Conditions

Hayes contextualized these micro factors within a broader macroeconomic framework. He tracked a proprietary US dollar liquidity index, noting that approximately a trillion dollars of liquidity was drained from dollar money markets due to actions taken by the Treasury and the Federal Reserve. He pointed out that while prior measures by the Treasury could inject liquidity into the system, current conditions do not offer similar opportunities.

As both the Treasury General Account rebuild and quantitative tightening have run their course, Hayes believes that liquidity levels have bottomed out and are poised to increase. He anticipates that future liquidity will stem more from commercial banks rather than the central bank, citing early signs of increased bank lending and commitments from financial institutions to support large industrial projects.

Hayes also commented on the October 10 liquidation event, describing it as a harsh lesson for unprepared leveraged traders. He cautioned that successful trading requires a disciplined approach to avoid liquidation.

In the aftermath of the market downturn, Hayes took the opportunity to acquire fundamentally strong altcoins, positioning himself for potential outperformance relative to Ethereum. He continues to support the long-term narrative of “institutional DeFi,” which could drive Ethereum’s value significantly higher by the end of the cycle.

Impact on the crypto market

• Hayes believes that the ETF basis trade is largely over, potentially stabilizing Bitcoin prices.
• The liquidity drain that affected the market appears to have concluded, paving the way for future growth.
• As macroeconomic conditions shift, Hayes expects rising bank lending to contribute to increased liquidity.
• Retail investors may have misinterpreted institutional selling as a bearish signal, impacting market sentiment.
• Hayes’s confidence in Bitcoin’s upward potential could influence trader behavior and market dynamics going forward.

Updated: 11/28/2025, 12:49:26 PM