Arthur Hayes: The US Fed's move to support Japanese bonds could boost Bitcoin prices

Bitcoin could break out of the “sideways” state if the US Federal Reserve supports the weakening Japanese bond market by printing money, according to BitMEX founder Arthur Hayes.

On Wednesday, Arthur Hayes hypothesized that the US Fed “may print money to influence the yen and Japanese government bonds (JGB) markets.”

Japan is currently facing a double challenge: the yen continuously depreciates while government bond yields rise sharply, signaling a loss of confidence in the market. This situation also affects the US, as Japanese investors may sell US Treasury bonds to buy JGBs with more attractive yields.

Hayes stated: “Will the collapse of the yen and JGB markets force the Bank of Japan (BOJ) or the Fed to print money? The answer is yes.”

“Analyzing the Japanese financial market is crucial because for Bitcoin to escape the sideways trend, a strong push from money printing is needed.”

The Fed’s intervention mechanism could become a liquidity catalyst

According to Hayes, the Fed might intervene by creating dollar reserves at major banks like JPMorgan, then selling dollars to buy yen to support the yen, and using yen to purchase JGBs to lower Japanese bond yields. This would expand the Fed’s balance sheet under the “Foreign currency-denominated assets” section.

He explained: “The Fed’s intervention is exactly what the fiat money system needs to sustain itself a little longer.”

How will the Fed print money to expand its balance sheet and intervene in the dollar-yen exchange rate and Japanese government bond markets?

| Source: Arthur Hayes Hayes also said he is waiting for actions from central banks, especially monitoring the Fed’s balance sheet via the weekly H.4.1 report, before deciding to increase investment risk.

“Bitcoin’s price has fallen as the yen strengthened against the dollar. I will not increase risk until I see the Fed actually printing money to intervene in the yen and JGB markets,” he said.

The US dollar “still stable” despite hitting a four-year low

The US Dollar Index (DXY) fell to 95.6 on Tuesday, the lowest since January 2022, according to TradingView data.

Although the dollar has declined 10% over the past year, US President Donald Trump reaffirmed in a speech in Iowa that the dollar “remains stable.”

He stated: “Looking at the value of the dollar and current business activity, you can see the dollar is still very strong. Interestingly, compared to China or Japan, I had to fight very hard with them because they always want to devalue the yen… the yen and the yuan, they are always trying to devalue their currencies.”

“They keep devaluing, and I’ve said before, ‘that’s unfair.’ Devaluation makes competition much more difficult,” he shared with CNBC.

Mr. Teacher