Key Notes
- Hayes claims a “stealth QE” by the US Treasury and Fed could spark a crypto bull run.
- Tight liquidity and rising government debt could lead to renewed monetary expansion.
- Hayes predicts traders could see major price swings once liquidity returns to markets. .
According to BitMEX co-founder Arthur Hayes, the United States is quietly preparing for what he calls a “hidden quantitative easing” (QE) program. He believes that this could lead to the next major rally in Bitcoin BTC $104 500 24h volatility: 2.1% Market cap: $2.09 T Vol. 24h: $89.44 B and the broader crypto market.
In his latest blog post , Hayes argued that US government spending remains on an unsustainable path. Washington is relying on massive bond issuance rather than tax hikes.
However, foreign investors are turning away from the US Treasury bonds, preferring gold after witnessing Western sanctions on Russian assets during the Ukraine conflict.
Meanwhile, domestic savings and major commercial banks are unable to absorb the mounting debt. This leaves “relative value” hedge funds, using leveraged repo financing, as marginal buyers of US Treasuries.
Notably, the Treasury is set to issue $2 trillion in new debt each year. As a result, through its Standing Repurchase Facility (SRF), the Federal Reserve will inject short-term liquidity when market rates rise.
Hayes argues that these SRF operations amount to “de facto QE”, money creation that flows through lending and ultimately supports Treasury markets. As SRF usage grows, global dollar liquidity expands, leading to renewed risk appetite.
Hayes noted that historically, Bitcoin rallies whenever the Fed’s balance sheet expands.
Calm Before the Storm?
In the short term, Hayes acknowledges that a US government shutdown and Treasury auctions have drained liquidity, putting pressure on crypto prices. At the time of writing, Bitcoin is trading below the key $104,000 level, sparking fears of further declines.
Hayes, which previously predicted a $100,000 price drop before a rally, maintains that these are temporary corrections. He suggests investors get ready for “a choppy market” until the government shutdown ends and wait for the right buying opportunity for crypto .
As the four-year anniversary of Bitcoin’s 2021 all-time high approaches, some may sell out of bear market fear. Hayes believes that that would be a mistake; liquidity dynamics, not sentiment, dictate the real direction of markets.
He added that a strong crypto market rebound will happen once the hidden QE begins.
When cash locked in Fed facilities like the Reverse Repo Program (RRP) re-enters circulation, he believes asset prices, including Bitcoin, will surge.
Hayes has previously stated that Bitcoin’s classic four-year halving cycle no longer defines its trajectory. Instead, the true driver is now monetary policy. He projects Bitcoin could climb to around $250,000 by the end of 2025, powered by rising institutional demand.
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