Bessent's Bond Buying Spree Sparks $224K BTC Price Target

Arthur Hayes, former co-founder of BitMEX and current chief investment officer at Maelstrom, believes that Treasury Secretary Scott Bessent is following a similar money-printing strategy as his predecessor Janet Yellen in 2023. According to Hayes, this could lead to a significant increase in the price of Bitcoin.

Bessent's Treasury has already doubled its long-term bond buyback operations from $2 billion to $4 billion per operation this month. This move mirrors the liquidity mechanics that fueled Bitcoin's 2023-2024 rally under Yellen, Hayes argues. In 2023, Yellen shifted issuance towards short-term bills, draining the Fed's reverse repo facility from $2.5 trillion to about $100 billion.

This cash flowed into bank reserves and, Hayes claims, into Bitcoin's 2023-2024 rally, which saw the price surge from around $16,000 in early 2023 to over $100,000 by the end of 2024. Bessent is now applying a similar strategy, with long-term bond buybacks already underway.

Hayes estimates that if this pattern holds, Bitcoin's price could reach as high as $224,000, based on a simple calculation using the same multiple from the previous rally. However, this figure carries some caveats, as other factors such as spot ETF approval and halving also contributed to the 2023-2024 rally.

Citadel Securities has pushed back against Bessent's buyback strategy, warning that it resembles financial repression that could weaken the dollar and stoke inflation. The firm's concerns highlight the potential risks associated with this approach.