Former BitMEX CEO Arthur Hayes believes Bitcoin (BTC) is poised to rapidly climb to new all-time highs, driven by a wave of liquidity from US Treasury buybacks.
In an April 23 article, Hayes argued that recent market turmoil triggered by aggressive US trade policies has created conditions similar to those that preceded previous Bitcoin rallies, with Treasury policy acting as the catalyst.
Hayes cited President Donald Trump’s tariff escalation earlier this month as the catalyst for volatility in bond and equity markets. The MOVE Index, a measure of bond market volatility, surged near record levels before moderating after a swift policy reversal and a shift in Treasury strategy.
According to Hayes, this pivot included a renewed focus on Treasury buybacks, a mechanism he says could serve as a backdoor source of liquidity.
Treasury buybacks and the Bitcoin liquidity thesis
Hayes described the Treasury’s buyback program, which involves issuing new debt to repurchase older, less liquid bonds.
While the operation maintains net cash neutrality on paper, Hayes emphasized that it frees up capital for relative value hedge funds that engage in the “basis trade,” simultaneously buying cash bonds and shorting bond futures.
As Treasury purchases increase the price of off-the-run bonds, hedge funds profit and reinvest, creating a reflexive loop that supports liquidity.
Hayes argued that the availability of leverage to these hedge funds reduces bond market volatility and supports bond prices, enabling the US government to issue additional debt at affordable yields.
He contended that the cumulative effect is a rise in the dollar supply that is not categorized as traditional quantitative easing but still benefits store-of-value assets like Bitcoin.
Comparisons to previous cycles
Drawing parallels to the third quarter of 2022, when then Treasury Secretary Janet Yellen used bill issuance to drain liquidity from the Reverse Repo Program (RRP), Hayes noted that Bitcoin rose nearly sixfold during the subsequent liquidity surge.
He now sees a similar structural setup, as Bitcoin had rebounded from a low of $74,500 and stood poised, in his view, to revisit and breach its previous peak of $110,000.
If the US deficit widens and buyback operations expand, Hayes believes Bitcoin could approach $200,000.
While acknowledging that such forecasts depend on sustained liquidity conditions and policy execution, he maintained that the structural setup favors Bitcoin as a hedge against fiat debasement.
Implications for altcoins
Although the essay focused on Bitcoin, Hayes also suggested that once Bitcoin decisively breaks through $110,000, a rotation into altcoins could follow.
The potential “Alt Season” will consist of capital flowing into tokens with sustainable cash flows and staking rewards. However, he emphasized that Bitcoin would remain the primary beneficiary of macro-driven liquidity injections in the near term.
Hayes concluded that, given current Treasury strategies, the probability of continued monetary expansion is high.
In such a scenario, Bitcoin’s correlation with tech stocks may break down as the asset reasserts its role as a digital alternative to gold. He argued that the monetary backdrop appears firmly aligned with Bitcoin’s ascent.
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