Community Trust ScoreVerified
BitMEX co-founder Arthur Hayes believes the next major Bitcoin rally is already set in motion, fueled by a wave of monetary expansion in the United States. In his latest essay titled “Hallelujah,” published on November 4, Hayes argued that the Federal Reserve’s growing balance sheet and expanding Treasury debt will serve as catalysts for a powerful new crypto bull cycle.
Hayes pointed to the rapid growth of the U.S. Treasury’s outstanding debt, which has been rising toward $2 trillion annually. To finance this massive deficit, the government relies on leveraged investors and repo markets, creating a feedback loop that increases liquidity.
The Standing Repo Facility: “Stealth QE” in Action
According to Hayes, the Federal Reserve’s Standing Repo Facility (SRF) plays a central role in this process. The SRF allows financial institutions to borrow cash from the Fed using Treasurys as collateral, providing instant access to liquidity.
He explained that when liquidity conditions tighten, the SRF effectively acts as a hidden form of quantitative easing (QE) — what he calls “stealth QE.” Although policymakers avoid labeling it as such, Hayes contends that each rise in SRF usage signals the Fed’s quiet monetization of government debt.
“If the Fed’s balance sheet grows, that is dollar liquidity positive, and ultimately pumps the price of Bitcoin and other cryptos,” Hayes wrote.
This liquidity expansion increases the supply of dollars in circulation, weakening real yields and creating an environment in which scarce digital assets like Bitcoin thrive.
Bitcoin Poised to Benefit from Rising Money Supply
Hayes maintains that Bitcoin historically performs best during periods of aggressive monetary easing, when investors seek alternatives to fiat currencies losing purchasing power. As the Fed continues to inject liquidity into the system through repo operations, the real value of money declines, while assets with fixed supply — such as Bitcoin — gain appeal.
He further noted that current market weakness represents only a temporary liquidity drain, linked to Treasury funding pressures. Once these pressures ease, excess capital will flow back into risk assets, particularly cryptocurrencies.
“This phenomenon will reignite the Bitcoin bull market,” Hayes emphasized, projecting that increased SRF balances will act as the spark for renewed momentum across digital assets.
Hayes Sees Bitcoin Hitting $1 Million Long-Term
Despite near-term market volatility, Hayes remains highly bullish on Bitcoin’s long-term trajectory. He reiterated his belief that the combination of fiscal expansion, monetary debasement, and growing global demand for hard digital assets could drive Bitcoin’s price to $1 million in the coming years.
In his view, the macroeconomic landscape mirrors previous periods of monetary easing that preceded major Bitcoin rallies — particularly during the post-pandemic era of 2020–2021, when massive liquidity injections sent BTC to record highs.
“Every time the Fed expands its balance sheet, Bitcoin eventually responds,” Hayes explained, framing the current environment as a repeat of those bullish liquidity cycles.
A “Liquidity Flood” Setting the Stage for the Next Crypto Bull Cycle
Hayes concluded that the Federal Reserve’s quiet monetary expansion—even under the guise of technical lending facilities—has already laid the groundwork for Bitcoin’s next surge. As more investors recognize the hidden inflationary effects of the Fed’s operations, demand for decentralized, hard-capped assets will likely accelerate.
The liquidity flood, he said, will not only support Bitcoin but also benefit the broader crypto ecosystem, from Ethereum to emerging blockchain assets, as global capital rotates back into digital markets.
While many analysts remain cautious amid ongoing volatility, Hayes’ thesis offers a macroeconomic perspective that aligns with previous bull cycles: when liquidity rises and fiat weakens, Bitcoin tends to lead the recovery.
