Former BitMEX CEO Arthur Hayes believes Bitcoin (BTC) is poised to quickly climb to new all-time highs, pushed by a wave of liquidity from US Treasury buybacks.
In an April 23 article, Hayes argued that latest market turmoil triggered by aggressive US commerce insurance policies has created circumstances comparable to people who preceded earlier Bitcoin rallies, with Treasury coverage performing because the catalyst.
Hayes cited President Donald Trump’s tariff escalation earlier this month because the catalyst for volatility in bond and fairness markets. The MOVE Index, a measure of bond market volatility, surged close to report ranges earlier than moderating after a swift coverage reversal and a shift in Treasury technique.
In response to Hayes, this pivot included a renewed concentrate on Treasury buybacks, a mechanism he says might function a backdoor supply of liquidity.
Treasury buybacks and the Bitcoin liquidity thesis
Hayes described the Treasury’s buyback program, which entails issuing new debt to repurchase older, much less liquid bonds.
Whereas the operation maintains internet money neutrality on paper, Hayes emphasised that it frees up capital for relative worth hedge funds that interact within the “foundation commerce,” concurrently shopping for money bonds and shorting bond futures.
As Treasury purchases enhance the value of off-the-run bonds, hedge funds revenue and reinvest, making a reflexive loop that helps liquidity.
Hayes argued that the supply of leverage to those hedge funds reduces bond market volatility and helps bond costs, enabling the US authorities to challenge extra debt at reasonably priced yields.
He contended that the cumulative impact is an increase within the greenback provide that’s not categorized as conventional quantitative easing however nonetheless advantages store-of-value property like Bitcoin.
Comparisons to earlier cycles
Drawing parallels to the third quarter of 2022, when then Treasury Secretary Janet Yellen used invoice issuance to empty liquidity from the Reverse Repo Program (RRP), Hayes famous that Bitcoin rose practically sixfold in the course of the subsequent liquidity surge.
He now sees an analogous structural setup, as Bitcoin had rebounded from a low of $74,500 and stood poised, in his view, to revisit and breach its earlier peak of $110,000.
If the US deficit widens and buyback operations increase, Hayes believes Bitcoin might strategy $200,000.
Whereas acknowledging that such forecasts depend upon sustained liquidity circumstances and coverage execution, he maintained that the structural setup favors Bitcoin as a hedge towards fiat debasement.
Implications for altcoins
Though the essay targeted on Bitcoin, Hayes additionally urged that after Bitcoin decisively breaks via $110,000, a rotation into altcoins might observe.
The potential “Alt Season” will include capital flowing into tokens with sustainable money flows and staking rewards. Nonetheless, he emphasised that Bitcoin would stay the first beneficiary of macro-driven liquidity injections within the close to time period.
Hayes concluded that, given present Treasury methods, the likelihood of continued financial enlargement is excessive.
In such a state of affairs, Bitcoin’s correlation with tech shares could break down because the asset reasserts its position as a digital various to gold. He argued that the financial backdrop seems firmly aligned with Bitcoin’s ascent.
