- Arthur Hayes warns soaring yields could break markets and force QE.
- Bitcoin may rally as Fed liquidity returns, similar to March 2020.
- BTC could decouple from equities amid Treasury chaos, Hayes hints.
As Bitcoin rebounds to $82k, BitMEX co-founder Arthur Hayes suggests the asset may be set to benefit from the current chaos unfolding in the U.S. bond market.
Hayes argues that unlike previous market shocks where BTC fell with stocks, this time could see Bitcoin rally.
Why Does Hayes See Bond Chaos as Bullish for BTC?
The recent 4.50% (a six-week high) rise in the benchmark 10-year U.S. Treasury yield had clearly spooked traders and investors. Hayes suggests this sharp surge is the breaking point for traditional markets, and warned, “The Fed is on the clock… Sh*t is breaking down.”
Hayes’ remarks come after a volatile day in global markets, as Treasury yields reached a six-week high. While some pointed fingers at China selling bonds, market insiders argue the real pressure appears more structural and liquidity-driven rather than purely geopolitical.
Related: Bond Market Pushes Back on Rate Cuts as 10-Year Yield Hits 4.36%
Specifically, as noted by analysts like Jim Bianco recently, rising yields are likely forcing big TradFi hedge funds to unwind highly leveraged “basis trades” (profiting from small differences between cash bonds and futures), similar to what USDe is in crypto.
When yields jump quickly, the bond prices held by these funds drop, triggering margin calls and forced selling – a process called “deleveraging.” This forced selling puts even more upward pressure on yields, creating a negative feedback loop that weighs on both stocks and crypto – at least initially.
How Does This Lead to a Bitcoin Rally? Hayes Sees QE Repeat
But Hayes is more interested in what comes next: Federal Reserve intervention. He believes a return to quantitative easing (QE) or even yield curve control could be necessary if the bond market seizes up. Such actions would flood the system with liquidity, creating what he previously dubbed the “Yachtzee” setup he anticipates for Bitcoin.
Hayes draws a parallel to March 2020, the last time the Fed launched large-scale QE. At that point, Bitcoin was trading under $10,000 and by November 2021, BTC had surged to its previous all-time high near $69,000. Hayes now sees a similar setup unfold now, and BTC might even break its correlation with stocks this time if the Fed were to inject liquidity.
Related: Is Arthur Hayes Right About $1M Bitcoin? Analyzing His Controversial Thesis
What Are the Short-Term Risks to This Thesis?
Hayes acknowledges short-term risks remain with Bitcoin’s strong ties to equities means continued short-term volatility, especially if yields keep rising.
But should the Fed bring back liquidity, history suggests BTC could front-run a monetary pivot. Hayes’ message is clear: “enjoy the chop till it lasts and Bitcoin might lead, not lag, the next macro move.”
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