Bitcoin Enters Bull Market as Treasury Operations Poised to Inject Liquidity, Says Arthur Hayes
Arthur Hayes, co-founder of BitMEX, believes Bitcoin has entered a new bull market, driven by anticipated actions from U.S. Treasury Secretary Scott Bessent to increase dollar liquidity through Treasury market operations.
Hayes’s long-standing thesis posits that when policymakers inject liquidity to manage Treasury yields, risk assets like Bitcoin tend to perform well. In a recent essay, he drew parallels between Bessent and his predecessor, Janet Yellen, both of whom have faced pressure to control borrowing costs amidst ongoing government spending. Hayes highlighted the 10-year Treasury yield as a critical indicator in U.S. financial markets.
According to Hayes, regulators become concerned when the 10-year Treasury yield approaches 5%, as higher yields can increase mortgage and corporate borrowing costs, potentially impacting the broader economy.
He recalled an instance in December 2023 when Yellen shifted the issuance mix towards Treasury bills from longer-duration bonds. This maneuver facilitated the movement of funds from the Federal Reserve’s Reverse Repo program into T-bills. Hayes estimates that the RRP balance decreased from approximately $2.5 trillion to $100 billion by the time Bessent assumed office in January 2025. He characterized this $2.4 trillion flow as a liquidity injection that benefited financial markets, leading to rallies in Bitcoin and the Nasdaq 100, while the 10-year yield moved away from the 5% mark, despite the Federal Reserve maintaining interest rates near 5.3% and continuing to shrink its balance sheet.
Hayes suggests Bessent is now employing similar tactics through the Treasury’s debt management tools. On August 19, the Treasury announced an increase in buybacks from $2 billion to at least $4 billion per operation. Initially, 10-year yields declined, and Bitcoin saw a rally in the subsequent days. However, this effect proved temporary, with the 10-year yield climbing back above its pre-announcement level in the following trading session.
This is why Hayes argues that the Treasury’s planned buybacks are insufficient relative to the approximately $40 trillion U.S. debt stock. “Bitcoin ripped off its lows after Yellen announced her money printing scheme, and I argue it will do the same after Bessent reestablished his conviction to follow in his predecessors’ footsteps and materially increase the pace of dollar liquidity creation,” he wrote.
Hayes outlined three potential paths for Bessent: reducing spending, which he deems unlikely given upcoming elections; adopting an aggressive, Bank of Japan-style commitment to buy unlimited bonds if yields exceed 5%; or, most plausibly in his view, implementing smaller, more frequent increases in buybacks unless volatility escalates rapidly.
He also pointed to the Treasury General Account (TGA), currently holding around $1 trillion, as another potential source of liquidity. A CNBC report indicated that the Treasury Secretary could draw down the TGA to finance additional buybacks.
These developments coincide with Bitcoin’s significant price appreciation, having recently surpassed $80,000 for the first time since May. At the time of writing, Bitcoin had retreated slightly from its peak but still reflected a substantial gain of over 23% in seven days and a similar increase over the past month. However, it remains approximately 37% below its all-time high of over $126,000, recorded in October 2025.
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