Dollar Weakness Sets Stage for Bitcoin and Ethereum Surge

Bitcoin and Ethereum are heading into a 'money printing bonanza' as Japan unwinds its carry trade, according to BitMEX co-founder Arthur Hayes.

Hayes pointed out that Japan's largest sovereign wealth fund, GPIF, held an unscheduled meeting in August, right after the G20. The dollar-yen dropped sharply immediately after, suggesting a deal was struck to repatriate Japanese capital and sell foreign assets.

Hayes believes two forces are driving dollar weakness: Japanese institutions borrowing dollars from the US Fed's repo facility and selling them on the forex market, and French banks being forced to increase the supply of euros to stabilize their system after Japan sells its debt holdings.

The result is a weakening dollar, which in turn boosts hard assets like Bitcoin and Ethereum. Hayes holds Ethereum as his largest position due to its 'most hated mega-cap coin' status and failure to clear its 2021 all-time high of $5,000.