Fed Money Printing For Japan Good For Bitcoin: Arthur Hayes

Bitcoin could break out of its “sideways funk” if the United States central bank attempts to support a failing Japanese bond market by printing money, according to BitMEX founder Arthur Hayes.

Hayes proposed a theory on Wednesday about how the Federal Reserve “could be printing money to manipulate the yen and JGB [Japanese government bond] markets.”

Japan faces a dual crisis: the yen is weakening while Japanese government bond yields are rising simultaneously, signaling a potential loss of market confidence. This also impacts the US because Japanese investors might sell US treasuries to buy higher-yielding JGBs instead.

“Will a meltdown of the yen and JGB markets cause some sort of money printing by the BOJ [Bank of Japan] or the Fed? The answer is yes,” said Hayes. 

“This discussion of Japanese financial markets is important because for Bitcoin to exit its sideways funk, it needs a healthy dose of money printing.”

Fed’s intervention mechanism could be a liquidity trigger

Hayes believes the Fed will intervene by creating dollar reserves with banks like JPMorgan, selling dollars for yen — which strengthens the yen — then using yen to purchase JGBs, lowering Japanese bond yields.

This expands the Fed’s balance sheet under “Foreign Currency Denominated Assets,” he explained. 

“This Fed intervention is just what the filthy fiat system needs to limp along a little longer.” 

Related: Bitcoin ‘groove’ to return despite gold, Nasdaq spotlight: Arthur Hayes

Hayes appears to be putting his money behind his theory and waiting for some movement from the central bank’s money printers, keeping an eye on the Fed’s balance sheet viewed through its weekly H.4.1 report.

“Bitcoin fell as the yen strengthened against the dollar. I will not increase risk before I confirm the Fed is printing money to intervene in the yen and JGB markets,” he said. 

Dollar “doing great” at four-year low

The US dollar index (DXY) slumped to 95.6 on Tuesday, its lowest level since January 2022, according to TradingView. 

The greenback has slid 10% over the past year, but US President Donald Trump still maintained it was “doing great” at a speech in Iowa on Tuesday. 

“I mean, the value of the dollar, look at the business we’re doing. No, the dollar is doing great. You know it’s very interesting, if you look at China or Japan, I used to fight like hell with them because they always wanted to devalue their yen … you know that, the yen and yuan, and they’d always want to devalue it,” he said, according to CNBC. 

“They devalue, devalue, devalue. And I said, ‘not fair.’ They devalue, because it’s hard to compete when they devalue.”

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