Dollar Liquidity Wave Predicted to Fuel Crypto Rally
Arthur Hayes, a well-known figure in the crypto space, has published an essay arguing that the US Treasury and Japan's Ministry of Finance have agreed on a way to strengthen the yen. According to Hayes, they will route newly printed dollars through the Federal Reserve's currency swap facility.
This move is expected to create a wave of dollar liquidity that will flow into global markets, which could drive asset flows into crypto and safe-haven assets. Hayes names Bitcoin (BTC) and Ethereum (ETH), as well as gold, as primary beneficiaries.
The Federal Reserve's currency swap facility allows for the exchange of currencies between central banks. By using this facility to strengthen the yen, Hayes believes that liquidity will increase in global markets, leading to a rally in asset prices.