Hayes Sees Stronger Yen Fueling Dollar Liquidity and Bitcoin Rally

Arthur Hayes, co-founder of BitMEX and crypto macro investor, believes that a strengthening Japanese yen could lead to increased dollar liquidity in global markets. This, in turn, would create a catalyst for Bitcoin's price to rise.

In an essay titled 'Yen-quake,' published on his Substack, Hayes argues that the next step in supporting the yen could be an expansion of the Federal Reserve's FIMA repo facility. The current cap of $60 billion per-counterparty would need approval from the Fed's Foreign Currency Subcommittee for any increase.

Japan's Ministry of Finance would pledge US Treasury holdings as collateral to the Fed, borrowing dollars without selling the bonds outright. This would expand the Fed's balance sheet and avoid disruption to the Treasury market. Hayes estimates that Japan and the GPIF together hold $1.373 trillion in US Treasuries eligible as FIMA collateral.

Hayes links his thesis directly to Bitcoin, arguing that additional dollar liquidity would increase demand for financial assets, with Bitcoin among the assets most likely to benefit. He also highlights Ethereum as a large-cap sleeper candidate and Ethena (ENA) as a potential 5x to 10x gain if stronger dollar liquidity boosts Bitcoin.