As speculation mounts over U.S. President-elect Donald Trump's impact on the cryptocurrency market, BitMEX co-founder Arthur Hayes has raised a controversial warning. Contrary to widespread optimism about pro-crypto policies, Hayes predicts a dramatic sell-off surrounding Trump’s inauguration in January 2025.

In his Dec. 17 blog post, Hayes cautioned against overestimating the speed of crypto-friendly policy changes. He noted a stark gap between market expectations and the practical realities of implementing new regulations. Hayes anticipates a sharp market correction, driven by the realization that any significant policy shifts would take much longer than anticipated.

Hayes’ investment fund, Maelstrom, plans to reduce its crypto positions early, aiming to re-enter the market at lower prices during the first half of 2025. He forecasts what he describes as a "harrowing dump" around inauguration day, followed by a "crack-up-boom phase" later in the year.

Despite Bitcoin's historic rally past $100,000 following Trump’s election victory, Hayes remains skeptical. He believes that the initial euphoria surrounding Trump’s presidency may lead to unrealistic investor expectations, setting the stage for a significant pullback. He also dismissed the likelihood of the U.S. or other nations establishing Bitcoin reserves in the near future.

Adding to the bearish sentiment, rumors suggest that MicroStrategy may enter a blackout period in January 2025, potentially pausing its Bitcoin purchases. While other analysts, including Singapore-based Matrixport, predict a strong start for Bitcoin in 2025, Hayes’ warning serves as a stark reminder of the risks in an overheated market.

Hayes admits the possibility of being proven wrong but remains committed to his strategy of buying dips. Whether his cautionary tale will materialize or the crypto market defies expectations, January 2025 is poised to be a pivotal moment for investors.