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In a new essay published on March 31, former Bitmex CEO Arthur Hayes will postpone a case for a Bitcoin price objective of $ 250,000 at the end of the year, based in his conviction that the American Federal Reserve has effectively copitulating (QE) BREVANTATION.
The essayPacked with lively satire and substantiated by rigorous macro -economic analysis, argues that the recent shift of the FED in policy indicates a structural return to Fiat -Liquidity expansion -an environment that is historically favorable for Bitcoin and other hard assets. “Powell proved last week that tax dominance is alive and well,” wrote Hayes. “That is why I am convinced that QT, at least with regard to treasuries, will stop in the short to medium term … Bitcoin will scream higher as soon as this is formally announced.”
QE returns, Fiat dies, Bitcoin flies
Hayes concentrates his argument about the FOMC meeting of the Federal Reserve, in which chairman Jerome Powell suggested that balance reduction or quantitative tightening (QT) – would considerably delay. Powell stated: “We want the MBs strongly [mortgage-backed securities] To roll our balance at some point. We would look carefully at the rolling of the MBs, but keep the total balance size constant. “
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This policy configuration, called “QT Twist” by Hayes, implies that the FED will reinvest the MBS removal in American treasuries, which supports the bond prices, while keeping the nominal balance stable. Hayes characterizes this as ‘treasury qe’, even if they are not labeled as such.
“If the FED balance is kept constant, they can buy: max $ 35 billion a month of treasuries or annualized $ 420 billion,” Hayes calculated. Moreover, the phasing out of treasury QT from $ 25 billion to $ 5 billion represents an annual positive shift of $ 240 billion in dollars liquidity.
In order to frame the political limitations of the FED, Hayes called on a satirical dialogue in which Powell is subject to humiliation by Minister of Finance Scott Bessent – a fictional dramatization that underlines the subordination of monetary policy to tax need. In this theatrical allegory, Powell is told by Bessent: “Next week at the FOMC you will start phasing out QT for my treasury tires and announcing that QE will start for treasury bonds in the near future. Do you understand?”
Hayes reinforces his point by drawing historical parallels with Arthur Burns, Fed Chair during the inflatory seventies, who in his 1979 speech ‘The fear of Central Banking’ admitted that political pressure made the Fed powerless to stop inflation.
Burns wrote: “The Federal Reserve was itself entangled in the philosophical and political movements that transformed American life and culture … Monetary policy was ruled by the principle of interrogating the inflatoary process, while still offers a large part of the pressure on the Marktplaats.”
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Hayes sees the same dynamics today, intensified by the government’s balloon shipping tax and the need to finance deficits for low yields.
Trump’s policy agenda
Hayes connects the pivot of the FED to the political reality of a second Trump administration, in particular the objectives for industrial policy. Trump has promised to reduce the American tax deficit from 7% to 3% of GDP by 2028, while production is being redesigned, retaining military expenses and avoid cuts on rights.
Hayes argues, however, that these objectives are mathematically incompatible without supporting the Central Bank, given the extent of the required debt issue. “Mathematics is incorrect, unless berry can find a buyer of treasuries at an oneconomically high price or low return. Only American commercial banks and the FED have the firepower to buy the debt at a level that the government can pay.”
In order to unlock that capacity, Hayes anticipates that the FED will not only stop QT, but also exempt the banks from the supplementary leverage (SLR) – an important regulatory limitation that limits bank purchases of American treasury.
Bessent himself hinted on such a step on the all-in podcast and said: “If we take [SLR] Away … we can actually pull Treasury Bill with 30 to 70 basic points. Every basic point is a billion dollars a year. “
Hayes claims that Bitcoin is unique positioned to take advantage of this shift in the monetary regime. In contrast to shares that are entangled in the legal and political architecture of the state, Bitcoin is a carrier instrument from the digital empire, without counterparty risk.
“Bitcoin is only based on the market expectations for the future offer of Fiat,” he wrote. “If my analysis … is correct, Bitcoin reached a local low of $ 76,500 last month, and now we start the climb to $ 250,000 towards the end of the year.”
Referring to Gold’s response to QE1 in 2008–2009, Hayes emphasizes how liquidity injections can lead to delayed but explosive repetition of anti-fiat assets. According to him, Bitcoin now plays the same role that Gold once did – only faster and with more direct global exposure.
Hayes also provided insight into the approach to the capital implementation of Maelstrom. “We do not use leverage and we buy small clips compared to the size of our total portfolio,” he said. “We bought Bitcoin and Shitcoins at all levels between $ 90,000 to $ 76,500.”
At the time of the press, BTC traded at $ 83,500.
Featured image of YouTube, graph of TradingView.com