Could Bitcoin Soar Again? Arthur Hayes Thinks Fed’s Moves May Just Spark a Crypto Revival!

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It appears that the next grand movement of Bitcoin shall rely less upon the whims of public sentiment and more upon the delightful flows of the U.S. dollar, as the shifting conditions of Federal Reserve liquidity lay the groundwork for a most promising crypto resurgence, driven by the broader forces of macroeconomics.

Mr. Hayes Proclaims that the Reversal of the Fed Balance Sheet May Elevate Bitcoin to Greater Heights

In a most enlightening discourse, Mr. Arthur Hayes, the esteemed chief investment officer at Maelstrom and co-founder of the once-revered crypto exchange Bitmex, has proffered his insights regarding the crypto markets, which he astutely connects to the trends of U.S. liquidity. On the date of January 14, he emphasized that a shift in the Federal Reserve’s policies could indeed alter the very trajectory of Bitcoin.

Mr. Hayes has based his forecast upon the intricate relationship between Bitcoin and the U.S. dollar’s liquidity, which he deems to be the central driver of the crypto market cycles. He elaborated with precision that Bitcoin’s somewhat lacklustre performance throughout the year of 2025 coincided rather fortuitously with a prolonged contraction in liquidity, a consequence of the Federal Reserve’s quantitative tightening and the leisurely pace of credit creation across the financial realm. During this period, the Fed diligently diminished its balance sheet, withdrawing dollars from the markets and applying pressure to those assets sensitive to liquidity-an endeavor not unlike trying to keep a soufflé from collapsing.

However, our astute Bitmex co-founder posited that this dynamic began to exhibit signs of change towards the latter part of the year, as the balance sheet runoff came to a halt and new reserve management purchases were set in motion. Framing this shift as a potential inflection point, he boldly asserted:

“Bitcoin and dollar liquidity bottomed around the same time. As dollar liquidity rapidly increases for the reasons described above, Bitcoin will follow.”

Moreover, he pointed to early indications of renewed commercial bank lending-particularly towards those government-supported strategic industries-as an indication that the creation of dollars was beginning to reaccelerate through various channels. Ah, the sweet scent of liquidity is in the air! 🍹

As Mr. Hayes gazes into the crystal ball of future markets, he elucidates how an expanding liquidity could translate into market positioning. Instead of merely increasing exposure through derivatives-a rather pedestrian approach, if I may say so-he expresses a preference for equity vehicles that hold substantial Bitcoin treasuries and incorporate leverage through their corporate balance sheets.

Specifically, he deigns to mention companies such as Strategy and Metaplanet, which, in their quest for greatness, issue equity and debt to amass Bitcoin, thereby creating an amplified exposure to the ebbs and flows of price movements. These structures may find themselves lagging during downturns but tend to emerge triumphantly during sustained rallies as the demand from investors returns like a long-lost friend. Within this framework of thought, he concludes:

“If Bitcoin can retake $110,000, investors will get the itch to go long Bitcoin through these vehicles. Given the leverage embedded in the capital structure of these businesses, they will outperform Bitcoin on the upside.”

Inquiries and Responses ⏰

  • Why does Mr. Hayes harbor the belief that Bitcoin may recover?
    He contends that the rising U.S. dollar liquidity resulting from the expansion of the Federal Reserve balance sheet has historically supported Bitcoin prices-much like a good cup of tea supports a genteel conversation.
  • What role does the Federal Reserve balance sheet play in Bitcoin performance?
    Mr. Hayes asserts that balance sheet expansion increases the availability of dollars, which Bitcoin tends to track closely-like a faithful hound follows its master.
  • How do bank loans affect dollar liquidity, according to Mr. Hayes?
    The rejuvenation of commercial bank lending creates new deposits, thus expanding the money supply-an act as generous as sharing one’s last biscuit at tea time.
  • Why does Mr. Hayes downplay comparisons between Bitcoin and gold?
    He believes that Bitcoin’s price is driven more by liquidity conditions than by the relative performance of other assets-a notion as clear as a sunny day in Bath.

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2026-01-16 05:04