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 appearing 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 line with Hayes, this pivot included a renewed deal with Treasury buybacks, a mechanism he says may function a backdoor supply of liquidity.
Treasury buybacks and the Bitcoin liquidity thesis
Hayes described the Treasury’s buyback program, which includes 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 improve 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 further debt at reasonably priced yields.
He contended that the cumulative impact is an increase within the greenback provide that isn’t 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 almost sixfold throughout the subsequent liquidity surge.
He now sees the same 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 develop, Hayes believes Bitcoin may method $200,000.
Whereas acknowledging that such forecasts rely 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 centered on Bitcoin, Hayes additionally urged that when Bitcoin decisively breaks by $110,000, a rotation into altcoins may observe.
The potential “Alt Season” will encompass 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 chance of continued financial enlargement is excessive.
In such a state of affairs, Bitcoin’s correlation with tech shares might break down because the asset reasserts its function as a digital different to gold. He argued that the financial backdrop seems firmly aligned with Bitcoin’s ascent.