Hayes Sees Falling EUR/JPY as Warning Sign for Crypto

Arthur Hayes has raised an alarm for crypto traders by pointing to the falling EUR/JPY currency pair. According to Hayes, a drop below 140 yen per euro would signal a significant increase in dollar liquidity, which would have positive implications for the cryptocurrency market.

In his essay 'Atención', Hayes explained that the falling EUR/JPY is a result of weakening pressure on the euro from France and strengthening Japanese capital repatriation. This is seen as a warning sign that French banks are nearing stress in sovereign and dollar repo markets.

The next step in Hayes' scenario involves two Fed tools: FIMA repo facility, which allows foreign central banks to borrow dollars against Treasuries, and RMPs (Reserve-Management Purchases), which increase short-dated Treasury securities to maintain ample bank reserves. Hayes believes that if these channels expand the supply of dollars, they will ultimately support risk assets.

Hayes has maintained a structural Bitcoin long position and predicts an Ether price target of $10,000 by the end of 2026, dependent on his proposed mechanism.