Yen Intervention Could Boost Bitcoin Liquidity
Arthur Hayes, former co-founder of BitMEX and macro commentator, believes that Washington and Tokyo are secretly working together to strengthen the yen. He argues in his essay titled 'Yen-quake' that this could lead to a surge in dollar liquidity and become a powerful catalyst for Bitcoin.
Hayes points out that Japan and the Government Pension Investment Fund (GPIF) hold a combined $1.373 trillion in U.S. Treasuries as leverage. He identifies three mechanisms by which Washington and Tokyo can push the yen back up:
Aggressive interest rate hikes from the Bank of Japan
A shift by Japan's Government Pension Investment Fund (GPIF) away from overseas assets and toward domestic holdings, or Japan's Ministry of Finance pledging U.S. Treasuries to the Federal Reserve in exchange for dollars, then selling those dollars to buy yen
Tapping the Fed's Foreign and International Monetary Authorities (FIMA) repo facility, a scenario that Washington and Tokyo currently favor, which would strengthen the yen without forcing Japan to dump its Treasury holdings on the open market.