Arthur Hayes' comments come as Bitcoin's price falls | Source: Image created with Gemini
Share
Key Takeaways
Arthur Hayes believes Bitcoin’s next major bull run could be on its way.
Hayes believes persistent U.S. deficits to borrow rather than save will force the Fed to expand its balance sheet, which will be bullish for crypto.
Despite the bullish macro setup, analysts warn Bitcoin could face further declines.
Bitcoin’s next bull run may be about to ignite as the U.S. Federal Reserve quietly expands its balance sheet to backstop ballooning government debt, according to former BitMEX chief executive Arthur Hayes.
In a new essay published on Nov. 3, Hayes said that “stealth quantitative easing” through the Fed’s repo facilities will unleash fresh dollar liquidity into the financial system, a catalyst he believes will propel BTC higher.
Try Our Recommended Crypto Exchanges
Sponsored
Disclosure
We sometimes use affiliate links in our content, when clicking on those we might receive a commission at no extra cost to you. By using this website you agree to our terms and conditions and privacy policy.
Hayes said the conditions that once fueled Bitcoin’s previous surges — easy money and ballooning government debt — are about to return.
He argued that the Fed’s Standing Repo Facility will act as a stealth form of quantitative easing, injecting new cash into the system to absorb Treasury issuance.
“This phenomenon will reignite the Bitcoin bull market,” Hayes wrote. “The dollar money market plumbing doesn’t lie.”
Hayes pointed to the four-year cycle anniversary of the 2021 Bitcoin peak, noting that “many will mistake this period of market weakness and ennui as the top and dump their stack.”
He argued that the structural incentives of governments make money creation inevitable.
“There are only two ways to pay for stuff, savings or debt,” he wrote.
“Taxes are not very popular, but spending is. Politicians will always favor borrowing from the future to get re-elected in the present.”
Fed balance sheet. Source: Federal Reserve.
With U.S. deficits projected to be around $2 trillion annually, Hayes said the Treasury’s continued borrowing will force the Fed to step in.
“If the Fed’s balance sheet grows, that is dollar liquidity positive, and ultimately pumps the price of Bitcoin and other cryptos,” he said.
Foreign central banks, once major buyers of Treasuries, are now wary of political risk, Hayes wrote.
“If Pax Americana is willing to steal Russia’s money, then no foreign owner of treasuries is ever safe,” he said, arguing that reserve managers now prefer gold.
Instead, leveraged hedge funds, known as “relative value” (RV) funds, have become the marginal buyers of U.S. debt, financing their purchases through repo markets.
“The trade: buy a cash Treasury debt security versus sell the corresponding Treasury futures contract,” he wrote.
Stealth QE
Hayes said the Fed’s Standing Repo Facility (SRF), which supplies cash to financial institutions in exchange for Treasuries, has effectively become a hidden form of quantitative easing.
“If the SRF balances are above zero, then we know the Fed is cashing the checks of the politicians using printed money,” he wrote.
“QE is a dirty word. Therefore, the Fed will do everything it can, with a straight face, to proclaim that its policy mix is not QE. Ultimately, that means the SRF is the conduit through which printed money enters the global financial system.”
Hayes said that while markets may remain volatile in the short term, the macro setup is clear.
“Between now and when stealth QE begins, one has to husband capital,” he wrote.
“Expect a choppy market. But once SRF balances rise, the amount of fiat dollars in the world expands as well.”
Bitcoin Analyst Outlook
Bitcoin continued to tumble on Nov. 5, extending a long slide since a major downward turn.
The asset has fallen roughly 20% from its all-time high, trading just below $102,000 at the time of reporting.
Analysts warn that Bitcoin’s recent weakness may signal the start of a more prolonged decline.
“Bitcoin’s pattern is almost identical to that of the broader crypto market,” said CCN analyst Valdrin Tahiri, noting that both the Relative Strength Index and Moving Average Convergence/Divergence have turned bearish and crossed into negative territory.”
Tahiri said that Bitcoin “barely holds onto its final support area” near $106,000, warning that a decisive close below this level “could trigger a drop of more than 20%.”
He added that “if the price breaks below $106,500, Bitcoin could quickly crash to the $85,700–$94,400 range.”
Tahiri pointed to a broader pattern of weakness across the crypto market.
“The total market cap’s breakdown below $3.55 trillion suggests the bullish cycle has topped,” he said.
Adding: “If we get a decisive close below this support, that confirms a prolonged correction phase has begun.”
Kurt Robson is a London-based reporter at CCN, specialising in the fast-moving worlds of crypto and emerging technology. He began his career covering local news in Cornwall after graduating from Falmouth University with First Class Honours in Journalism. There, he cut his teeth on everything from council meetings to missing swans.
He quickly rose through the ranks to become a frontline journalist at several of the UK’s leading national newspapers. Over the years, he has interviewed musicians and celebrities, reported from courtrooms and crime scenes, and secured multiple front-page exclusives.
Following the upheaval of the COVID-19 pandemic, Kurt shifted his focus to technology journalism—just ahead of the AI boom. With a natural curiosity and a trained eye for emerging trends, he has found a new rhythm in reporting on innovation.
At CCN, Kurt's work focuses on the cutting edge of crypto, blockchain, AI, and the evolving digital world. Drawing on his background in people-first reporting and his deep interest in disruptive tech, Kurt delivers stories that are insightful, entertaining, and human-centric.
