Arthur Hayes, the co-founder of BitMEX and a well-known cryptocurrency investor, has outlined a fresh scenario that might spark Bitcoin’s next major rally.
Hayes suggests that if the Federal Reserve steps in to support struggling Japanese markets through what would be termed a “currency intervention,” it could lead to an increase in Bitcoin’s value.
In his recent analysis, Hayes explained that the Fed might print dollars to purchase Japanese yen and then use those yen to acquire Japanese government bonds (JGBs). This strategy would effectively enlarge the Fed’s balance sheet, functioning as another round of quantitative easing.
He emphasized that “Bitcoin tends to rise alongside expansions of the Fed’s balance sheet.” Hayes criticized traders who attempt short-term timing with highly leveraged positions. Instead, he believes that over time, Bitcoin and select high-quality altcoins will steadily gain value relative to fiat currencies. Previously, he forecasted Bitcoin pushing beyond $110,000 amid these dynamics.
While gold and other commodities are hitting record prices, Hayes observed Bitcoin lingering near $90,000 despite political developments like Trump returning to office and growing pressure on the Fed for interest rate hikes. He interprets this as a potential trigger for Federal Reserve action—especially considering Japan’s bond market turmoil. According to him: “For Bitcoin to break free from its current plateau requires robust monetary expansion.”
The situation in Japan’s financial markets is raising red flags according to Hayes. The rapid depreciation of the yen against the dollar combined with soaring yields on Japanese bonds signals diminishing investor confidence. Given Japan’s status as a net energy importer, a weaker yen also fuels inflation there; meanwhile falling bond prices are causing significant unrealized losses at the Bank of Japan.
Hayes highlighted that Japan holds roughly $2.4 trillion worth of US Treasury securities. Should yields on Japanese bonds continue climbing sharply, Japan might need to offload some US Treasuries in order to buy back its own debt—potentially driving up borrowing costs for America—a scenario undesirable for Washington policymakers.
The process could be initiated by US Treasury Secretary Scott Bessent using tools like the Exchange Stabilization Fund (ESF), which permits currency market interventions without congressional approval. However, since only the Federal Reserve can create money supply directly through printing dollars or quantitative easing measures—the ultimate authority lies with them rather than Treasury officials.
Please note: This content does not constitute investment advice.