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Arthur Hayes, former CEO of BitMEX, predicts a major sell-off in cryptocurrency markets around the time of Donald Trump’s inauguration on Jan. 20, 2025. Hayes, now managing a family office called Maelstrom, argues that the market’s high expectations for quick regulatory changes under Trump will be met with disappointment. In his blog post, he explains that Trump will have limited time to implement significant changes before attention shifts to the 2026 mid-term elections.

Following Trump’s election win in November, the crypto market has experienced a sharp rally, with Bitcoin increasing over 50%. Many investors are hopeful that Trump, who has promised to bring a crypto-friendly regulatory framework, will make sweeping changes. These expectations are based on Trump’s vows to create a national Bitcoin reserve and overhaul crypto regulation. However, Hayes is skeptical, arguing that Trump will not be able to fulfill these promises quickly. He notes that due to the political realities of the situation, any meaningful policy changes will take more time than the market expects.

Hayes warns that this gap between investor expectations and political realities will trigger a significant sell-off in the crypto market. “The market will instantly wake up to the reality that Trump has, at best, one year to enact any policy changes,” Hayes wrote. He predicts a “harrowing dump” in crypto prices, with the sell-off beginning around Trump’s inauguration.

As a result of this prediction, Hayes’ Maelstrom fund plans to reduce its holdings in anticipation of lower prices in early 2025. He explained that the market’s enthusiasm might not be matched by quick regulatory action, leading to investor regret. However, Hayes acknowledged that if the market continues its upward trajectory, his strategy could backfire. He emphasized that Maelstrom is prepared to adjust and buy back into the market if the bull run continues.

Despite Hayes’ cautious outlook, some analysts, including those from Matrixport, expect a strong start for Bitcoin in 2025. They believe that Trump’s crypto-friendly policies could help drive the price higher. Still, Hayes remains cautious, noting that the crypto market is often prone to volatility and could experience a sharp correction once the initial excitement over Trump’s presidency fades.

As the market watches for regulatory changes, Hayes’ comments highlight the uncertainty surrounding Trump’s ability to deliver on his crypto promises in the short term. He forecasts that the market’s optimism may give way to a harsh reality in the coming months.