BitMEX co-founder Arthur Hayes believes a Federal Reserve-backed rescue of the Japanese yen could become an unexpected catalyst for Bitcoin, gold, and Ether to rally.
He says that the move could inject new U.S. dollar liquidity into global markets, potentially creating new buying pressure for major crypto assets.
How a Yen Rescue Could Add More Dollars to the Market
According to Arthur Hayes, Japan is facing two big problems. Firstly, the yen is getting weaker, and, secondly, Japanese government bond yields are rising.
If Japan raises interest rates too much to support the yen, it could trigger a major market shock by unwinding the global yen carry trade. If it sells its large holdings of U.S. Treasury bonds to buy yen, U.S. bond yields could also jump.
To avoid these problems, Hayes says Japan could use the Fed’s Foreign and International Monetary Authorities (FIMA) Repo Facility.
Instead of selling its U.S. government bonds, Japan can use them as collateral to borrow newly created U.S. dollars from the Fed.
Because the Fed creates new dollars to provide these loans, Hayes says the process works much like quantitative easing (QE) and adds more liquidity to global markets.
Recently, the U.S. and Japan have already discussed ways to support the yen, while U.S. Treasury Secretary Scott Bessent has said it is reasonable for the Fed to consider increasing the size of its FIMA facility.
Hayes Sees Bitcoin, Gold as Key Winners
Hayes believes more U.S. dollar liquidity usually pushes investors toward assets like Bitcoin, Ether, and gold. Here’s how.
- Bitcoin and Ether Are Highly Liquidity Sensitive
Hayes says that whenever the Federal Reserve puts more money into the financial system, assets like Bitcoin usually go up. He points to 2020–2022, when the Fed added huge amounts of money during the COVID pandemic, Bitcoin and Ether reached record highs.
- Gold Remains a Safe Choice
While many crypto investors buy Bitcoin and Ether, traditional investors often choose gold when central banks increase the money supply.
- Avoidance of Market Shocks
Using the FIMA facility could help Japan support the yen without causing a sudden market shock, creating a better environment for risk assets like Bitcoin and Ether.
Japan Could Have $1.37 Trillion in Treasury Collateral
The scale of Japan’s potential Treasury backed borrowing is another major part of Hayes’ argument.
He estimates that the Japanese government holds around $1.143 trillion in U.S. Treasuries, while Japan’s GPIF pension fund holds another $230 billion. Together, that represents about $1.373 trillion in Treasury assets that could potentially matter to his liquidity thesis.
However, Hayes notes that the current FIMA facility has a $60 billion per counterparty limit. He says that the limit would need to be removed or expanded significantly for his proposed strategy to work at a much larger scale.
What Investors Should Watch
For now, Hayes says investors should monitor the Federal Reserve’s weekly H.4.1 report.
If the “Foreign Currency Denominated Assets” section starts increasing, it could be a sign that the Fed is providing more dollar liquidity to foreign markets, which Hayes believes would be positive for Bitcoin, Ether, and gold.
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