- Arthur Hayes links U.S. Treasury buybacks to Bitcoin’s path toward $200K.
- Reduced Fed tightening seen as a bullish trigger for Bitcoin price momentum.
- Hayes expects BTC dominance to rise before altcoin rotation kicks off.
Former BitMEX CEO Arthur Hayes is connecting the latest U.S. fiscal policy shifts directly to Bitcoin’s price rally, predicting a climb beyond $110,000 and even towards $200,000.
In a new essay titled “Ski Cut,” Hayes detailed his thesis, linking macroeconomic policies by the U.S. Treasury and Federal Reserve to increase liquidity, which he firmly believes bolsters the bullish case for Bitcoin.
In his blog post, Hayes reflected on market sentiment during the third quarter of 2022, when Bitcoin faced pressure below $16,000, with some expecting it to fall under $10,000. He compared that period to recent concerns about a possible decline below $60,000 from the $74,500 level. He argued that investors have underestimated the liquidity effects of recent government actions.
Additionally, Hayes noted that U.S. Treasury Secretary Janet Yellen increased the issuance of short-term bills over long-term bonds. This tactic aims to pull liquidity parked in the Federal Reserve’s reverse repo facility back into the broader financial market.
Related: Buy Bitcoin Under $100K While You Can, Suggests Arthur Hayes Citing Fed QE
While these moves aren’t officially labeled quantitative easing (QE), Hayes contends they effectively function the same way by injecting liquidity. He claimed this has already led to market rallies, as investors began repositioning after initially dismissing the policy shift.
Potential for More Fed Easing Measures?
Adding to this picture, the Federal Reserve itself already reduced the pace of its quantitative tightening (QT) program back in March – a move Hayes also labeled as positive for liquidity.
Related: ‘Fed on the Clock’: Hayes Links Bond Market Stress to Coming Bitcoin Gains
He further speculated about additional Fed measures that could impact bond and crypto markets, such as exempting banks’ Treasury holdings from the supplementary leverage ratio (SLR) calculation, or implementing a “QT Twist” where proceeds from maturing mortgage-backed securities (MBS) are reinvested into Treasury bonds instead of shrinking the Fed’s balance sheet.
Why Does Hayes Position Bitcoin as a Digital Gold Hedge?
Hayes argues Bitcoin stands to benefit significantly from these actual and potential liquidity injections, especially if volatility continues roiling traditional financial markets. He suggested that Bitcoin could break away from technology equities and move in tandem with gold, positioning itself as a digital hedge in the context of rising budget pressures and geopolitical instability.
He also stated that his firm, Maelstrom, increased its Bitcoin holdings during the price drop from $110,000 to $74,500. According to Hayes, Bitcoin remains the primary beneficiary of dollar expansion efforts, particularly in anticipation of future trade tensions between the U.S. and China.
Once Bitcoin decisively breaks above $110,000, Hayes anticipates a potential altcoin rally could ignite, following historical patterns where capital rotates from Bitcoin into smaller digital assets after major BTC moves.
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
