Arthur Hayes Sees Yen Crisis Fueling Bitcoin and Gold

Japan’s prolonged low-rate regime and heavy public debt mean sharp moves in the yen or Japanese government bonds can spill into global carry trades and dollar funding markets. BitMEX co-founder Arthur Hayes has focused on the Federal Reserve’s Foreign and International Monetary Authorities, or FIMA, repo facility, which lets foreign official institutions temporarily exchange U.S. Treasuries for dollars. A substantial increase in its use could ease offshore dollar stress and function like a liquidity injection without a conventional Fed quantitative-easing program.

Hayes said mounting pressure on the yen and Japan’s sovereign-bond market could ultimately force the Fed to expand its balance sheet through FIMA, creating what he described as “stealth” quantitative easing. He expects the resulting dollar liquidity to spill into scarce assets including Bitcoin, break the cryptocurrency out of its range and fuel a liquidity-driven bull market. A near-term yen rally could first trigger deleveraging and volatility, he cautioned. The report specified neither a launch date nor a dollar amount, and the scenario remains Hayes’ forecast rather than an announced policy move.