Arthur Hayes warns: Stealth QE may restart, potentially triggering the next bitcoin bull market
ChainCatcher reported that BitMEX founder Arthur Hayes published his latest article, stating that the operations of the US Treasury and the Federal Reserve are brewing a "Stealth QE" (quantitative easing), which could become the core catalyst for a new round of surges in Bitcoin and the crypto market. Currently, US government spending continues to expand, and political incentives mean they are more inclined to issue debt rather than raise taxes.
Due to the risk of dollar assets being confiscated after the Russia-Ukraine war, foreign central banks are more inclined to buy gold instead of US Treasuries. The US private savings rate is insufficient to support the issuance of government bonds, and the four major commercial banks have only absorbed a small portion of the new bonds. "Relative Value (RV) hedge funds" have become the marginal buyers of US Treasuries, mainly purchasing them through repo (repurchase agreement) leveraged financing.
The US Treasury is expected to issue about $2 trillion in new bonds each year to cover the deficit. When market liquidity is tight and the SOFR (Secured Overnight Financing Rate) is higher than the upper limit of the federal funds rate, the Federal Reserve injects cash directly into the market through the Standing Repo Facility (SRF). This is equivalent to "disguised QE": printing money → lending → supporting the Treasury market.
As the use of the SRF increases, global dollar liquidity rises, and the actual effect is equivalent to QE. Hayes predicts that this will reignite the bull cycle for Bitcoin and the crypto market. "Every time the Federal Reserve expands its balance sheet, BTC goes up." Currently, during the US government shutdown and Treasury auctions, short-term liquidity tightening puts pressure on the crypto market.
Hayes advises investors to "preserve capital and wait for the opportunity," stating that the market will see a strong rebound after the "Stealth QE" is launched.
