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\n\t\t\t\t\t\t\t\t\tHayes sees Treasury policy, rather than Federal Reserve cuts, as a potential catalyst for Bitcoin’s next leg higher.\t\t\t\t\t\t\t\t<\/p>\n<\/p><\/div>\n
Bitcoin (BTC) has entered a new bull market, according to Arthur Hayes, who argues that US Treasury Secretary Scott Bessent is preparing to create more dollar liquidity through Treasury market operations.<\/p>\n
The thesis rests on a familiar argument of his: when policymakers inject liquidity to keep Treasury yields under control, Bitcoin and other risk assets tend to benefit.<\/p>\n
In an August 25 essay, Hayes compared<\/a> Bessent with his predecessor, Janet Yellen, arguing that both have faced pressure to keep borrowing costs under control while the US government continues spending. He focused on the 10-year Treasury yield, which, as he put it, is the most important price in US financial markets.<\/p>\n According to the BitMEX co-founder, regulators tend to get nervous whenever the yield on the 10-year Treasury is near 5% because higher yields tend to increase the cost of mortgages and borrowing for corporations and consumers, which could have an impact on the economy.<\/p>\n He went back to December 2023, when Yellen boosted the issuance of Treasury bills compared to long-duration Treasury bonds, allowing money market fund balances to move from the Fed\u2019s Reserve Repo program to T-bills.<\/p>\n Hayes estimates that the RRP balance fell from roughly $2.5 trillion to $100 billion by the time Bessent took office in January 2025. He also described the resulting $2.4 trillion movement as a liquidity injection that flowed into financial markets that saw Bitcoin and the Nasdaq 100 both rallying while the 10-year yield moved away from 5%, even though the Federal Reserve kept rates near 5.3% and continued shrinking its balance sheet.<\/p>\n Bessent is now attempting something similar through the Treasury\u2019s debt-management tools. Recall that on August 19, he announced<\/a> that buybacks would increase from $2 billion to at least $4 billion per operation. Ten-year yields initially fell, while Bitcoin rallied over the following days. However, the effect did not last, and by the following trading session, the 10-year yield had climbed back above its pre-announcement level.<\/p>\n And that\u2019s why Hayes is contending that the Treasury\u2019s planned purchases are too small relative to the roughly $40 trillion US debt stock.<\/p>\n \u201cBitcoin ripped off its lows after Yellen announced her money printing scheme, and I argue it will do the same after Bessent reestablished his conviction to follow in his predecessors\u2019 footsteps and materially increase the pace of dollar liquidity creation,\u201d he wrote.<\/p>\n<\/blockquote>\n The crypto investor laid out three paths for Bessent: cutting spending, which is unlikely given upcoming elections; an aggressive, Bank of Japan-style pledge to buy unlimited bonds if yields top 5%; or, most likely in his view, smaller and more frequent buyback increases unless volatility rises fast.<\/p>\n He also sees another possible source of liquidity in the Treasury General Account (TGA), which is at approximately $1 trillion, with a CNBC report suggesting<\/a> that the Treasury Secretary could drain the TGA to fund additional buybacks.<\/p>\n All this is happening with Bitcoin having already moved considerably higher, after recently crossing<\/a> $80,000 for the first time since May. While writing this piece, the OG crypto had gone back closer to $79,000 than $80,000, although the price still reflected a jump of more than 23% in seven days and slightly less than that across one month, but it remains about 37% below its October 2025 all-time high record of over $126,000.<\/p>\nYou may also like:<\/h3>\n
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Why Hayes Expects More Liquidity<\/h2>\n