BitMEX co-founder and Maelstrom CIO Arthur Hayes says Bitcoin has entered a new bull market, arguing that changes in US Treasury debt management could increase dollar liquidity and create a favourable environment for risk assets. In his latest essay, Same Same But Different, Hayes focused on the Treasury’s use of longer-dated Treasury buybacks and their potential impact on financial conditions.
Hayes outlined two possible paths. In the more aggressive scenario, he believes the Treasury could move towards a form of yield-curve control if the 10-year US Treasury yield rises above 5%. The other case is larger and more frequent Treasury buybacks combined with the deployment of roughly $1 trillion currently held in the Treasury General Account. Hayes argues that either route could increase liquidity flowing through financial markets.
His bullish view extends beyond Bitcoin. Hayes said Maelstrom is now at “maximum risk”, with significant exposure to BTC, ETH, ENA and ETHFI. He also warned that the next phase of the market could be considerably more volatile, meaning his argument is not that Bitcoin will rise smoothly, but that greater liquidity could create the conditions for another major expansion in crypto prices.
Why Treasury liquidity matters so much for Bitcoin
The connection comes down to how money moves through the financial system. When the Treasury spends money held in its General Account at the Federal Reserve, those funds move into private bank accounts and the broader financial system. The Treasury General Account has previously reached around $1.8 trillion, meaning changes in its balance can have a noticeable effect on liquidity even without the Federal Reserve changing interest rates.
Treasury buybacks work differently but can also influence market liquidity. Instead of issuing new debt simply to finance government spending, the Treasury can buy back older securities and improve liquidity in particular parts of the bond market. That matters because Treasury securities sit at the centre of global financial markets. Changes in their supply, demand and yields can influence borrowing costs across stocks, credit and crypto.
Bitcoin tends to be particularly sensitive to changes in global liquidity because it has no earnings stream or traditional cash flow to anchor its valuation. When excess capital is available, and investors become more willing to take risk, Bitcoin can benefit disproportionately. That is why Hayes’ argument is ultimately less about Treasury buybacks themselves and more about whether debt management decisions result in more money chasing financial assets.
Also Read: Archax Launches Tokenized US Treasury Product Offering 24/7 On-Chain Exposure
Could a 5% 10-year Treasury yield really change the Bitcoin outlook?
A sustained move above 5% would create a much more complicated environment for Bitcoin. The 10-year Treasury is one of the most important benchmarks for global borrowing costs, and a higher yield gives investors a more attractive return from an asset generally considered much safer than crypto. Bitcoin therefore has to compete with increasingly attractive risk-free returns when Treasury yields rise.
The last time the 10-year yield approached 5% in October 2023, Bitcoin was trading below $35,000. By March 2024, it had climbed above $70,000, showing how quickly crypto valuations can change when liquidity and expectations shift. But that period also demonstrates why Treasury yields alone cannot explain Bitcoin’s performance. Spot Bitcoin ETFs, institutional demand and changing expectations around monetary policy were also major forces behind the subsequent rally.
The bigger risk to Hayes’ thesis is therefore a scenario in which Treasury yields rise because investors are demanding significantly more compensation to hold US debt. That could indicate concerns about inflation, government borrowing or fiscal sustainability rather than abundant liquidity. In that case, Bitcoin could face competing forces: more dollars entering the system on one side, but higher interest rates and weaker risk appetite on the other.
If yields rise while liquidity expands and investors continue moving into risk assets, Hayes’ bullish argument becomes stronger. If yields rise because bond investors are losing confidence in US fiscal conditions, the same move could instead trigger a risk-off reaction that hurts Bitcoin before any liquidity benefit becomes visible.
In another development, Hayes has thrown his support behind Synapse Protocol’s Hypercall, describing the decentralized options exchange as a potential competitor to Deribit. His endorsement, combined with a multimillion-dollar purchase of the SYN token, started a rally before traders moved to lock in profits.
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