Major Crypto Sell-Off Expected Post-Trump Inauguration

The gap between crypto market expectations and reality is set to trigger a major crypto sell-off when Donald Trump is inaugurated, according to former BitMEX CEO Arthur Hayes in his recent essay.

Hayes, who now runs a family office called Maelstrom, argues that there are no politically viable solutions for Trump to quickly implement the policy changes anticipated by crypto investors. "The market will instantly wake up to the reality that Trump has at best one year to enact any policy changes on or around January 20th," he stated. This realization could lead to a severe sell-off in crypto and other equity trades related to Trump 2.0.

Currently, the crypto market is experiencing an extended price rally, primarily due to Trump’s election win in November. Bitcoin has surged over 50% since then, rising from around $68,000 to a record high of $108,135, as noted by The Block’s bitcoin price page.

Trump’s election has heightened expectations for significant changes in crypto regulations. The former president has promised to create a national strategic reserve of bitcoin, among other initiatives.

Hayes highlighted that most legislators will begin campaigning by late 2025 for the mid-term elections in November 2026, including the entire House of Representatives. This timeline is why he believes Trump has only one year to effect policy changes. He remarked, "Fixing the underlying domestic and international issues that negatively affect them would take even the most astute and powerful politicians over a decade, not just one year." Therefore, investors may face significant regret due to unrealistic expectations.

The Maelstrom CIO anticipates a "harrowing dump" in the crypto market around January 20, 2025, coinciding with Trump’s inauguration. His company plans to reduce its holdings beforehand.

Despite this, Hayes acknowledged a risk that selling early could backfire if the crypto bull market continues through Trump’s inauguration. He stated, "Knowing this, we are committed to admitting defeat if the bull market steamrolls through January 20th, licking our wounds, and getting back on the bull."