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Arthur Hayes sees something many overlook. The co-founder of BitMEX published an essay on August 10 explaining why Bitcoin might rise — and it involves Tokyo, not Washington.
The central idea is this: Japan could deposit its U.S. Treasury bonds directly with the Federal Reserve, receive dollars in return, and then use those dollars to buy back yen on the markets. This mechanism already exists. It’s called the FIMA Repo Facility — a tool the Fed provides to foreign monetary authorities to offer temporary dollar liquidity. There’s no need to sell Treasuries hastily on the secondary market. Deposit, borrow, act. Simple on paper. Less simple in practice.
Hayes sees in this mechanism an indirect channel to Bitcoin. The idea: more dollars in circulation, even temporarily, boosts overall liquidity. Historically, when liquidity rises, risky assets follow. Bitcoin leads the way.
The 2020-2022 Precedent Hayes Keeps in Mind
There’s a period Hayes clearly cites. Between 2020 and 2022, the Fed’s balance sheet doubled. During this same window, Bitcoin climbed to nearly $69,000. Coincidence? Not according to him. The correlation between monetary expansion and Bitcoin’s performance is an argument he often brings up, and here he presents it again.
But Hayes isn’t naive. He admits that using the FIMA wouldn’t equate to a classic quantitative easing. It’s not QE. It’s a short-term tool, designed to ease temporary dollar tensions — not to inject massive and lasting liquidity into the system. The nuance is important.
And there’s a cap. The Fed’s documentation is clear on this: $60 billion per counterparty. Not unlimited. Not extendable at will. This figure, $60 billion, stands as a wall in Hayes’s scenario. Enough to calm a short-term liquidity crisis. Probably not enough to trigger a crypto bull run.
The Carry Trade, A Factor Too Quickly Forgotten
The real risk in all this isn’t the FIMA. It’s the Bank of Japan.
If Tokyo decides to raise its interest rates — and the markets are watching this very closely — the yen could revalue quickly. Very quickly. And then, investors who borrowed in yen at low rates to invest in riskier assets find themselves stuck. They have to unwind their positions. Sell. Repay. That’s the carry trade, and its unwinding can be brutal.
This phenomenon was already seen in 2024. The repercussions hit stocks, crypto, emerging markets. Not anecdotally — visibly, with rapid declines and exploding volumes. Hayes knows it. The market knows it. Yet, the scenario he describes bets on Tokyo choosing the FIMA over rate hikes. A risky bet.
Financial markets remain skeptical. Even when the yen briefly strengthened in recent weeks, the effects faded quickly. No lasting trend. No clear signal that Japanese authorities will coordinate a large-scale intervention via the FIMA.
The channel identified by Hayes between the yen, the Fed, and Bitcoin remains theoretically credible. But credible doesn’t mean probable. The market’s reaction will depend on the actual amounts mobilized, Tokyo’s decisions, and how the Fed chooses to manage the FIMA tool — which it hasn’t announced plans to strengthen or expand.
No details on timing either. Hayes doesn’t provide a precise window. He sets an analytical framework, a possible scenario, and leaves investors to draw their own conclusions. It’s his usual method: writing long, dense essays with a central thesis and multiple ramifications. Here, the thesis is: weak yen + FIMA + liquidity = rising Bitcoin. Perhaps. Seems plausible under certain conditions. But there are many “ifs” in the chain.
Bitcoin could benefit from increased liquidity if the scenario unfolds as Hayes envisions. Or suffer from abrupt adjustments if the carry trade unwinds in the wrong direction. Both options are on the table. Investors are scrutinizing every announcement from the Bank of Japan and the Fed to know which way it leans. The FIMA Repo Facility, capped at $60 billion per counterparty, remains at the heart of the described mechanism — and its structural limits remain intact.
Hub: Bitcoin: Price, News, and Analysis
Frequently Asked Questions
What is the FIMA Repo Facility and what is its link to Bitcoin according to Hayes?
The FIMA Repo Facility is a Fed tool that allows foreign monetary authorities to obtain dollars temporarily by depositing U.S. Treasury bonds. Hayes believes that Japan’s use of it to support the yen could increase dollar liquidity and indirectly benefit Bitcoin.
What is the FIMA Repo Facility cap mentioned by Hayes?
The Fed imposes a cap of $60 billion per counterparty, which limits the potential market impact according to Hayes himself.
Why does the yen carry trade pose a risk in this scenario?
If the Bank of Japan raises its rates, the yen strengthens, and investors who borrowed in yen to invest in risky assets must quickly unwind their positions, potentially causing massive sell-offs in markets like Bitcoin — a phenomenon already observed in 2024.
