BitMEX founder Arthur Hayes said that potential steps by the US and Japan to support the yen could increase global dollar liquidity, potentially leading to a strong rally in Bitcoin and the cryptocurrency market.
Hayes, in his assessment via X, pointed out three different scenarios that could be implemented to support the Japanese yen. The first is for the Bank of Japan (BOJ) to aggressively raise interest rates. However, Hayes noted that this option might be limited due to its potential impact on the Japanese economy.
The second scenario envisages institutions, including the Japan Government Pension Investment Fund (GPIF), selling their overseas assets and reinvesting the proceeds in domestic assets. Such a move is considered to potentially ease pressure on the yen.
The third option suggested by Hayes is for the Japanese Ministry of Finance to secure dollar liquidity from the Federal Reserve by using its holdings of US Treasury bonds as collateral. Hayes stated that Japan could then sell the dollars it obtained in the foreign exchange market and buy yen, arguing that US and Japanese officials are more receptive to this method.
According to Hayes, if the US Treasury Department expands the limits provided through the Federal Reserve’s FIMA repo mechanism, Japan could intervene more strongly against the depreciation of the yen by using its holdings of US Treasury bonds.
Hayes stated that this process could increase global dollar liquidity, and that the resulting increase in liquidity could be a significant catalyst for a rise in Bitcoin and other crypto assets.
Hayes’s assessment reveals that the cryptocurrency market is highly sensitive not only to direct crypto developments but also to central bank monetary policies, foreign exchange markets, and global liquidity conditions. However, it is noted that these scenarios are not certain to materialize and that their impact on Bitcoin will depend on how liquidity is managed.
*This is not investment advice.
