Arthur Hayes, co-founder and former CEO of cryptocurrency exchange BitMEX, provided X with a detailed analysis of the US economic environment and its potential impact on the cryptocurrency market. Known for his incisive commentary and deep understanding of traditional and digital finance, Hayes’ insights are closely watched by industry participants.
Why the Crypto Bull Market Will Restart on Monday
in post, Hayes noted that the Treasury General Account (TGA) received a significant boost due to an inflow of approximately $200 billion in tax receipts. “Expected tax receipts have added approximately $200 billion to the TGA,” Hayes said, setting the stage for broader discussion about the potential impact on financial markets.
Hayes then focused on U.S. Treasury Secretary Janet Yellen’s future decisions regarding the management of the TGA. In a tone that was both respectful and solemn, he outlined several potential scenarios with profound implications for market liquidity. “Forget the May Fed meeting. The 2Q24 refund announcement will come out next week. As far as what game (Janet) Yellen is going to play, there are a few options here,” Hayes said.
First, he suggested that Yellen could inject $1 trillion of liquidity into the economy “by reducing TGA to zero and halting Treasury issuance.” This strategy involves directly increasing the money supply by using funds accumulated in the TGA for federal spending without issuing new debt.
Second, Hayes speculated that it would result in a $400 billion increase in liquidity by “shifting more borrowing to T-bills, which removes money from RRPs.” These maneuvers include Treasury selecting short-term debt instruments that typically have lower interest rates but increase turnover in government securities. This could potentially pull funds out of the overnight reverse repo market, where financial institutions temporarily store excess cash.
According to Hayes, combining these two approaches could result in a “$1.4 trillion liquidity injection” if Yellen decides to stop issuing longer-dated bonds and increase paper issuance while depleting both TGA and RRP accounts. Hayes emphasized, “The Fed is irrelevant. Yellen is a bitch. You have the utmost respect for her.” This statement emphasizes his belief that Treasury’s actions on Federal Reserve policy have a significant impact in the current economic system.
Hayes predicted that these actions could lead to a bullish reaction in the stock market and, more importantly, a rapid acceleration in the cryptocurrency market. “If any of these three options happen, I would expect a huge rally and most importantly, a re-acceleration of the cryptocurrency bull market,” he explained.
The implications of such a financial strategy are significant. Increased liquidity generally reduces the attractiveness of low-yield investments such as bonds and encourages the pursuit of higher returns in riskier assets, including stocks and cryptocurrencies. Moreover, changes in market sentiment around ‘risk’ could see significant capital flowing into the cryptocurrency space, which is perceived as a high-growth, albeit volatile, investment area.
In conclusion, Hayes’ analysis suggests that next week (with the refund announcement on Monday, April 29) could be very important for market watchers. His perspective, based on deep financial expertise, points to the potential for pivotal changes in U.S. fiscal policy that could have ramifications for global markets. For cryptocurrency investors, these developments could represent a significant move, highlighting the need for vigilance and preparedness to respond to new economic signals.
At press time, BTC was trading at $64,483.
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Source: NewsBTC.com