Arthur Hayes says stealth Fed support for the yen could expand dollar liquidity, weaken the DXY, and mechanically push Bitcoin and majors to new highs.
- Hayes outlines a “Woomph” scenario where the NY Fed and U.S. Treasury quietly create dollar reserves to buy yen and JGBs, shoring up Japan’s bond market.
- He argues any balance-sheet expansion would weaken the dollar index and “mechanically” levitate Bitcoin and quality altcoins as fresh liquidity chases risk assets.
- Bitcoin stalls near record territory while Ethereum and Solana trade in tight ranges as traders watch weekly Fed foreign-asset data for confirmation of the thesis.
Former BitMEX CEO Arthur Hayes is betting that quiet Federal Reserve intervention to support the Japanese yen could be the next spark for a renewed Bitcoin (BTC) rally, even as the market hesitates near record highs.
Fed, Yen, and the “Mechanical” Bitcoin Trade
In a new essay titled “Woomph,” Hayes argues that the Fed has both the legal room and the incentive to expand its balance sheet to stabilize Japan’s currency and bond market, a move he believes would spill directly into crypto. “Bitcoin and quality shitcoins will mechanically levitate in fiat terms as the quantity of paper money rises,” he wrote, tying any new dollar liquidity to higher nominal prices for risk assets.
Hayes sketches a scenario in which the New York Fed, acting with the U.S. Treasury, creates fresh dollar reserves to buy yen, which are then recycled into Japanese Government Bonds (JGBs) to strengthen the yen and cap yields. The point, in his view, is to keep Japanese investors from dumping U.S. Treasuries en masse, a selloff that could “spike U.S. borrowing costs” and undermine financial stability.
Signals, Theory, and Market Skepticism
Hayes sees recent market signals as clues that policymakers are already probing this path. He cites a January 23 “rate check” by the New York Fed on the USD/JPY pair and notes that QCP Capital analysts read the move as evidence of growing official concern over yen weakness. He interprets this as the Fed “deliberately and publicly telegraphing its intentions,” even if no formal program has been announced.
The mechanism, he says, would likely run through the U.S. Treasury’s Exchange Stabilization Fund, alongside the Fed’s authority to hold foreign currency assets. “Buffalo Bill Bessent can intervene in the currency markets… The Treasury taps the NY Fed to help manipulate the markets,” Hayes wrote, adding that confirmation would appear in weekly increases in the “Foreign Currency Denominated Assets” line on the Fed’s balance sheet.
Prices, Positioning, and What Comes Next
For now, Hayes is explicit that his framework remains hypothetical: “What I will present is a theory which the actual flow of money… doesn’t support yet.” He says his own trading stance depends on seeing the Fed’s balance sheet actually expand, arguing that such a move would weaken the dollar index and “provide fuel for asset price inflation” across global markets.
Crypto traders remain cautious. Bitcoin has struggled to sustain levels above $90,000, recently trading near $89,000 after a brief dip below $88,000, underscoring lingering profit‑taking and macro uncertainty. Major altcoins are mixed: Ethereum changes hands around $3,000, up roughly 2–3 percent over the past 24 hours, while Solana trades in the low‑190 dollar area, with its 24‑hour range clustered between about $185 and $194.
Other analysts are also watching Tokyo. Market commentator Michaël van de Poppe has argued that renewed Bank of Japan bond support could “allow risk-on assets to continue moving,” putting Japanese policy firmly on crypto traders’ macro dashboards. For now, Hayes’ thesis turns weekly Fed data into a potential trading trigger—an abstract balance‑sheet line item that could, if he is right, become a very concrete catalyst for Bitcoin.
