Arthur Hayes, co-founder of BitMEX, expects U.S. Treasury debt-management measures and a possible expansion of Federal Reserve liquidity facilities to become the next major catalyst for crypto markets, setting a year-end Bitcoin target near $126,000 and an Ether range of $20,000 to $30,000.
Hayes’s thesis centers on the Treasury’s move to increase buybacks of long-dated government bonds from $2 billion to $4 billion, covering maturities between 10 and 30 years. He characterized the amount as modest in isolation but argued that it signals growing official concern over the market’s ability to absorb long-term U.S. debt without pushing yields sharply higher.
In Hayes’s view, a sequence of Treasury and Federal Reserve actions designed to stabilize bond markets would add dollar liquidity that could eventually flow into scarce assets, including Bitcoin. The argument depends less on the immediate size of the buyback program than on whether it marks the beginning of more aggressive support for the Treasury market.
Hayes sees Treasury market strain behind the policy shift
Hayes, who said he started his trading career at Citibank and Deutsche Bank in Hong Kong, pointed to a U.S. debt burden of roughly $40 trillion and rising federal interest costs. He said these pressures have made Treasury-market functioning a more urgent concern for policymakers, especially as the government continues to finance large deficits.
He also cited the relationship between short-term Treasury yields and the Federal Reserve’s policy rate. According to Hayes, the two-year Treasury yield was trading around 50 to 60 basis points above the effective federal funds rate, a gap he interpreted as evidence of strain in the market’s expectations for funding costs and debt issuance.
The Treasury has relied heavily on short-dated bills, Hayes said, while demand for longer-dated bonds has appeared less reliable. Issuing more bills can ease immediate pressure on long-term borrowing costs, but it also requires the government to refinance a larger portion of its debt more frequently. That leaves the Treasury more exposed if short-term funding conditions worsen.
Hayes does not expect the Federal Reserve to respond by raising interest rates. Instead, he expects officials to lean toward measures that preserve liquidity and limit upward pressure on Treasury yields, potentially moving toward some form of yield-curve control. Under yield-curve control, a central bank commits to keeping government bond yields within a desired range through purchases or other market operations.
Foreign repo facility could become the next trigger
Hayes identified the Federal Reserve’s Foreign and International Monetary Authorities repo facility, commonly known as the FIMA repo facility, as a possible mechanism for supporting overseas Treasury holders.
The facility allows eligible foreign central banks and international monetary authorities to temporarily exchange U.S. Treasuries for dollars rather than sell the securities outright into the market. Hayes suggested that removing or easing counterparty constraints could allow larger foreign Treasury holders to access dollar liquidity directly from the Federal Reserve.
He focused particularly on Japan, which he said holds about $1 trillion of U.S. Treasuries. Hayes argued that Japanese institutions could face greater domestic funding demands related to inflation support, defense spending and other fiscal requirements. In such a scenario, access to dollars through the FIMA facility could reduce the need for rapid Treasury sales.
That arrangement would also place more Treasury-related liquidity on the Federal Reserve’s balance sheet. Hayes said such a step could arrive before formal yield-curve control, and named the Kansas City Federal Reserve’s Jackson Hole economic symposium as a potential venue for a policy signal. The symposium was scheduled for Aug. 27 to Aug. 29, according to the event timetable referenced by Hayes.
Bitcoin targets depend on a liquidity scenario
Hayes placed several Bitcoin price levels at the center of his market outlook: $60,000, $100,000 and the previous record region around $125,000 to $126,000. His year-end forecast of approximately $126,000 assumes that Treasury and Federal Reserve measures create conditions favorable to risk assets and limited-supply monetary assets.
He said an uncapped or more flexible foreign repo arrangement could help propel Bitcoin toward $120,000 before opening the path to a much larger rally. Hayes floated $500,000 as a possible later-stage outcome, though that projection relies on a far more expansive liquidity response than the current $4 billion bond-buyback plan.
The forecast also came with a sharply different downside case. Hayes said Bitcoin could fall toward $35,000 if Michael Saylor, executive chairman of Strategy, were forced to sell holdings during a severe market decline. He described that possibility as a capitulation event comparable in market psychology to the March 2020 crash, when leveraged positions and liquidity shortages intensified selling across global markets.
The two scenarios underline how dependent Hayes’s view is on market structure. His bullish case assumes policymakers prevent disorderly Treasury selling; his bearish case assumes a major corporate Bitcoin holder becomes a source of forced supply.
Ether could lead a shift from Bitcoin dominance
Hayes also made a bullish case for Ether, arguing that it had yet to surpass its 2021 peak near $5,000 while several major tokens had already moved above previous cycle highs. He cited Ethereum’s operating history since 2015 and its large developer community as reasons it could attract capital if market participation broadens beyond Bitcoin.
He placed Bitcoin dominance near 60% and compared it with the 25% to 26% range reached during the 2020-2021 market cycle. A decline toward 40%, he said, would likely require Ether to absorb a substantial share of incoming capital because of its market size.
Hayes dismissed the proposed U.S. “Clarity” bill as a major market driver, saying its passage would have limited influence on crypto prices. He contrasted crypto policy with federal support for strategic technology sectors, citing government stakes in companies including Intel, IBM and rare-earth mining businesses.
Flop Network links token rewards to AI inference
Alongside his macro outlook, Hayes discussed Flop Network, a project designed to price computing power through “floating-point operations per unit of time.” The network proposes a “Proof of Useful Inference” model in which participants complete artificial-intelligence inference tasks and receive token rewards.
Hayes said roughly 20% of the project’s modeled 10-year token supply would be distributed through an airdrop, while ongoing issuance would reflect compute being treated as a commodity. Flop Labs, the related private company, would receive a small portion of block rewards for the first two years, through the first halving, before that allocation falls to zero, he said.
He gave a late-October 2025 target for a testnet lasting about 90 days, followed by a planned mainnet launch in the first quarter of the next year. Hayes said activity on the testnet would require real use of testnet tokens for participants seeking any weighting in a future token conversion or distribution process.
As Hayes links macro policy to explosive BTC moves, deepen your strategy with our latest insights in Fed-driven Bitcoin volatility.
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