Arthur Hayes Predicts Bitcoin Bull Run Will 'Reignite' as Fed’s Balance Sheet Expands

Core Viewpoint - The next bull run for Bitcoin may be imminent as the U.S. Federal Reserve expands its balance sheet to support increasing government debt, according to Arthur Hayes, former CEO of BitMEX [1][5]. Group 1: Economic Conditions - Hayes suggests that "stealth quantitative easing" through the Fed's repo facilities will inject new dollar liquidity into the financial system, which he believes will drive Bitcoin prices higher [2][11]. - The conditions that previously fueled Bitcoin's surges—easy money and rising government debt—are returning, with the Fed's Standing Repo Facility acting as a hidden form of quantitative easing [3][11]. - U.S. deficits are projected to be around $2 trillion annually, which will necessitate continued borrowing by the Treasury, prompting the Fed to intervene [7]. Group 2: Market Dynamics - Hayes emphasizes that if the Fed's balance sheet expands, it will create positive dollar liquidity, ultimately boosting the prices of Bitcoin and other cryptocurrencies [8]. - Foreign central banks, once significant buyers of U.S. Treasuries, are now cautious due to political risks, leading reserve managers to prefer gold instead [9]. - Leveraged hedge funds, known as "relative value" (RV) funds, have become the marginal buyers of U.S. debt, financing their purchases through repo markets [9].