Arthur Hayes: Bitcoin bull market started by Treasury liquidity

Arthur Hayes, co-founder of BitMEX and chief investment officer of Maelstrom, argues in a new essay that the US Treasury, through its expansion of bond buybacks, is effectively creating more dollar liquidity. According to Hayes, Bitcoin is the first to benefit from this, and the bull market has already begun. At the time of writing, Bitcoin is trading at $80K, up 3.8% over the past 24 hours.

Bitcoin is available at OKX and Bybit.

In brief:

• Hayes argues that the expansion of Treasury buybacks increases dollar liquidity and benefits Bitcoin.
• In an aggressive scenario, the Treasury could move to de facto yield curve control if the 10-year yield rises above 5%.
• Maelstrom is running at maximum risk, with large positions in Bitcoin, Ethereum, ENA and ETHFI.

Hayes sees Treasury buybacks as a driver of liquidity

In his essay, titled Same Same But Different, Hayes explains that Treasury Secretary Scott Bessent is expanding the purchase of longer-dated government bonds. According to him, this creates more dollar liquidity in the system, which historically benefits Bitcoin first.

Hayes also outlines a more aggressive scenario: if the 10-year yield breaks through the 5% threshold, the Treasury could shift to a form of de facto yield curve control, in which the government actively steers interest rates on government bonds. In his view, the more likely path is a gradual increase in buybacks, combined with deploying the approximately $1 trillion currently held in the Treasury General Account.

Maelstrom at maximum risk with Bitcoin as a core position

Hayes says he is convinced that Bitcoin has entered a new bull market, but simultaneously warns of considerably higher volatility than investors are used to. That expectation translates directly into the strategy of his own investment vehicle.

Maelstrom has increased its risk exposure to the maximum. According to Hayes, the portfolio consists of large positions in Bitcoin, Ethereum, ENA and ETHFI. The rise in Bitcoin over the past period aligns with his expectation, although in his view the market remains unsettled. Other analysts have previously also accounted for larger price movements in both directions.