Key Takeaways
- Arthur Hayes said Treasury buybacks signal a new bitcoin bull run as BTC topped $80,000 this week.
- The Treasury will double long-bond buyback caps to $4 billion per operation starting Sept. 9.
- Hayes said his fund Maelstrom is now at “maximum risk,” with heavy exposure to BTC, ETH and ENA.
Buybacks, Yields and Bitcoin Price’s Rally
Arthur Hayes, the BitMEX co-founder and Maelstrom Chief Investment Officer, released a research essay today in which he vehemently argued that the U.S. Treasury’s expanded bond buyback program has marked the start of a fresh bitcoin bull market. The timing of the piece coincided with bitcoin price movements pushing the asset to an intraday high of $81,000.
To elaborate on the Treasury’s upcoming moves, the government body is going to double its maximum long-bond buyback size from $2 billion to at least $4 billion per operation. This dynamic is set to go live starting Sept. 9 and will continue to go on till Nov. 4, sitting within a larger plan that authorizes $38 billion for liquidity-support purchases and $25 billion for short-maturity cash-management buybacks during the quarter.
Hayes’s argument is quite straightforward, i.e. by lapping up older, longer-dated Treasury securities, their prices are bound to shoot up (while reducing their yields). As a result, risk assets like bitcoin will become more attractive to anyone looking for solid returns.
On a more technical note, it bears mentioning that the 10-year Treasury yield declined toward 4.65% and the 30-year moved closer to 5.20% around the announcement. Not only that, Bitcoin’s move up in recent days has coincided with roughly $517 million in bitcoin ETF net inflows, adding a second source of buying pressure on top of the macro narrative.
‘Maximum Risk’
In a recent interview, Hayes told Crypto Banter host Ran Neuner that avoiding risk assets in the current environment would be a mistake, adding that his firm Maelstrom currently has exposure to many such assets including bitcoin, ether, ENA and ETHFI.
Hayes has argued that Bessent is effectively following the same liquidity-expansion playbook former Treasury Secretary Janet Yellen used in prior years, using debt issuance and buybacks to manage market conditions in ways that function similarly to, without technically being, Federal Reserve quantitative easing.
To this point, the Bitmex co-founder authored an article recently titled “Yen-quake,” in which he argued that pressure on the dollar-yen exchange rate could force Japan and the U.S. to coordinate policy responses in ways that would ultimately benefit bitcoin.
Both of his writings shared a common message: that sovereign balance-sheet management (not crypto-native developments) is the dominant force behind bitcoin’s next major move.
Not Quite Quantitative Easing
In his recent assertions, Hayes has been mindful of drawing a distinction between Treasury buybacks and the Fed’s asset purchases, adding that while both can support risk assets, there is a marked difference between the two.
Buybacks, he highlights, are officially a debt-management tool intended to improve market liquidity and reduce the Treasury’s borrowing costs across different maturities, not a deliberate attempt to inject new money into the financial system the way quantitative easing does.
In fact, the New York Fed separately conducted about $10 billion in reserve management purchases around the same period, and the Treasury General Account held approximately $940 billion, with projections putting the year-end balance near $850 billion.
In the coming week or two, Hayes predicts that the ongoing bitcoin price surge could see the asset swing past $110,000, with some of his commentary even floating the $200,000 range (but as part of a longer-term target).
