Arthur Hayes, co-founder of BitMEX, predicts that U.S. Treasury bond buybacks could significantly boost market liquidity, potentially driving Bitcoin to as high as $110,000, with a possibility of reaching $200,000. In an April 23 article on Substack, Hayes highlights the Treasury’s plan to issue new debt to repurchase older, less liquid bonds, known as off-the-run Treasuries.
Since these bonds typically have lower trading volumes, buying them back could help stabilise the bond market while simultaneously creating arbitrage opportunities for institutional investors.
Hayes further notes that Treasury Secretary Scott Bessent will likely rely more heavily on bond issuance and buybacks to sustain market stability, especially given the widening U.S. deficits and falling tax revenues. He compares this strategy to quantitative easing, a tactic traditionally used by central banks to increase the money supply and stimulate economic activity. However, in this case, liquidity is being injected by the U.S. Treasury itself rather than the Federal Reserve.
As Hayes explains, this buyback strategy will reduce yields on older bonds, prompting investors to seek higher returns in riskier assets such as cryptocurrencies. At the same time, as bond markets stabilise, investors will likely gain confidence in borrowing money to make larger investments. This increased buying power could lead to more significant price fluctuations in riskier assets like Bitcoin, potentially accelerating its price during market rallies.
This pattern mirrors the strong Bitcoin rally of late 2022, which was driven by increasing market liquidity. Hayes argues that many investors are overly fixated on when the Federal Reserve will lower interest rates, failing to recognise that the central bank has already slowed its quantitative tightening, thus subtly easing market conditions.
Looking ahead, Hayes predicts that if liquidity continues to flow, Bitcoin could climb to $110,000 and, in a best-case scenario, soar toward $200,000. Beyond this threshold, altcoins could experience an even larger surge as investors shift into higher-risk assets. Moreover, China’s potential response to rising U.S. tariffs could trigger another wave of capital flight into Bitcoin and other cryptocurrencies. Hayes speculates that Beijing might devalue its currency, which, coupled with increased market liquidity, could reignite the crypto bull market.
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