Former BitMEX CEO Arthur Hayes says a quiet Fed intervention to shore up the yen could be the surprise trigger that sends Bitcoin and other risk assets higher — and he’s mapped out exactly how that could happen. What Hayes is proposing - In a new essay titled “Woomph,” Hayes outlines a scenario where the New York Fed, working with the U.S. Treasury, creates fresh dollar reserves to buy yen. Those dollars would then be recycled into Japanese Government Bonds (JGBs) to stabilize the yen and cap Japanese yields. - The stated goal: prevent a wave of JGB-driven selling of U.S. Treasuries that could spike U.S. borrowing costs and threaten global financial stability. - Hayes says any such action would expand dollar liquidity, weaken the dollar index (DXY), and “mechanically” lift nominal prices of risk assets — including “Bitcoin and quality shitcoins,” which “will mechanically levitate in fiat terms as the quantity of paper money rises.” How the mechanics would work - Hayes points to existing tools — the Treasury’s Exchange Stabilization Fund and the Fed’s authority to hold foreign currency assets — as the likely channels for intervention. - He says evidence of the program would show up in the Fed’s weekly balance sheet data, specifically increases in the “Foreign Currency Denominated Assets” line. - Hayes also highlights a January 23 “rate check” by the New York Fed on USD/JPY and cites QCP Capital’s interpretation of that move as a sign of rising official concern about yen weakness. Market context and reaction - Hayes is careful to label his framework a theory: “What I will present is a theory which the actual flow of money… doesn’t support yet.” His trading trigger is straightforward — he wants to see the Fed’s balance sheet actually expand before changing positions. - Crypto markets are watching but cautious. Bitcoin has struggled to hold above $90,000, trading near $89,000 after a brief dip below $88,000. Ethereum sits around $3,000 (up roughly 2–3% over 24 hours), while Solana trades in the low-$190s (24-hour range roughly $185–$194). - Other analysts are watching Tokyo too. Michaël van de Poppe has argued that renewed Bank of Japan bond support could “allow risk-on assets to continue moving,” putting Japanese policy squarely on macro screens for crypto traders. Why it matters for crypto - If Hayes is right and the Fed/Treasury quietly supplies fresh dollar liquidity to stabilize Japan, the resulting weaker dollar and elevated fiat supply would likely be bullish for nominal crypto prices. - Hayes’ novel twist: he’s using weekly Fed balance-sheet lines as a concrete data point that could convert a theoretical policy move into a tradable catalyst for Bitcoin. Bottom line Hayes’ thesis is speculative but precise: watch the Fed’s foreign currency asset line and the overall balance sheet. If those numbers start to climb, it could signal coordinated action that boosts liquidity, dents the dollar, and provides a fresh tailwind for crypto risk assets. Read more AI-generated news on: undefined/news

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