Treasury Buyback Policy Triggers Bitcoin Bull Market, Says Arthur Hayes
Arthur Hayes, co-founder of BitMEX, believes that the recent surge in Bitcoin's price above $80,000 is the start of a new bull market. In an essay published on August 25, Hayes linked this rally to Treasury Secretary Scott Bessent's decision to at least double the size of long-end liquidity-support buybacks.
The increased buyback limits, from $2 billion to at least $4 billion per operation between September 9 and November 4, can raise prices and suppress yields on older securities. This, Hayes argues, makes risk assets like Bitcoin more attractive, encouraging capital to rotate towards them.
Hayes drew a parallel with former Treasury Secretary Janet Yellen's approach in December 2023, when she increased Treasury bill issuance relative to long-duration bonds, pulling money market balances out of the Federal Reserve's Reverse Repo Program and into the private market. The resulting shift was seen as a liquidity injection that coincided with Bitcoin and the Nasdaq 100 rallying.
Hayes estimates that program's balance fell from roughly $2.5 trillion to about $100 billion by the time Bessent took office in January 2025, describing the current Treasury buyback policy as a similar liquidity signal. He believes that if Bessent's approach mirrors Yellen's, Bitcoin has meaningful room to run further from current levels.
The rally unfolded with Bitcoin jumping from around $64,000 to roughly $69,750 to $71,000 within days of the August 19 announcement, a 8.7% increase tied specifically to the announcement itself. The rally then continued and accelerated over the following days, eventually pushing Bitcoin above $80,000.
Hayes expects Bessent to increase the pace of purchases over time rather than stopping at the current announced buyback size. He also pointed to the Treasury General Account as a potential additional source of liquidity if drawn down to fund further buybacks.