Arthur Hayes Points to the $1.37 Trillion Door: Massive Rally Ahead for Bitcoin and Ethereum

Arthur Hayes predicts that liquidity provided by the Fed to Japan through the FIMA repo facility could trigger a major wave of growth in Bitcoin (BTC), Ethereum (ETH), and gold prices.

BitMEX co-founder Arthur Hayes shared a striking analysis suggesting that a new wave of liquidity in global markets may be on the horizon. According to Hayes, steps taken to strengthen the Japanese yen could indirectly turn into a mechanism that fuels cryptocurrencies and precious metals. At the center of this scenario are the massive bond reserves held by the U.S. Federal Reserve (Fed) and Japan.

Hayes states that instead of implementing aggressive interest rate hikes to protect the value of the yen, Japan could use the Fed’s FIMA repo facility. In this system, Japan provides its holdings of U.S. Treasury bonds as collateral to receive dollars from the Fed, then sells those dollars in the market to buy yen. If the current counterparty limit of $60 billion is increased, the bond pool of approximately $1.37 trillion held by the Japanese government and the GPIF pension fund could come into play as potential collateral.

Fed Balance Sheet and Liquidity Impact on Cryptocurrencies

The most critical outcome of this mechanism stands out as the expansion of the Fed’s balance sheet and the entry of new dollar liquidity into the market. Hayes describes this situation as “indirect money printing.” The increasing amount of dollars in the market represents a strong bullish signal for gold, Bitcoin, and Ethereum, which have limited supplies.

However, for this scenario to materialize, the Fed needs to significantly raise the current $60 billion transaction limit. If this obstacle is overcome, Japan’s massive bond reserves could transform into a global liquidity injection, triggering a new period of value appreciation in the cryptocurrency market. Hayes argues that this process could be an inevitable way to balance risks in dollar-based assets and products like the MSCI Japan ETF.