Key Notes
- Arthur Hayes noted that stress from a weakening yen and rising JGB yields may force renewed money printing from the US central bank.
- He believes such a move from the Fed would inject liquidity and favor risk assets like Bitcoin.
- The falling US Dollar Index could further aid the upside in risk-on assets like Bitcoin.
Former BitMEX CEO Arthur Hayes is expecting a Bitcoin
BTC
$89 893
24h volatility:
2.2%
Market cap:
$1.80 T
Vol. 24h:
$47.03 B
upside breakout, provided the US Federal Reserve intervenes in the Japanese bond market by printing more money. In his latest essay, “Woomph,” Hayes proposed a theory that the Fed could soon opt for liquidity infusion to “manipulate the Japanese Yen and JGB [Japanese government bond] markets.”
Arthur Hayes on Japan’s Bond Market Situation
Japan is facing a twin challenge as the yen continues to weaken while Japanese government bond yields rise at the same time. This development signals a potential stress as well as eroding market confidence.
The situation also has implications for the United States, as higher domestic yields could prompt Japanese investors to shift funds out of US Treasurys and into higher-yielding JGBs. Hayes added:
“Will a meltdown of the yen and JGB markets cause some sort of money printing by the BOJ [Bank of Japan] or the Fed? The answer is yes. This discussion of Japanese financial markets is important because for Bitcoin to exit its sideways funk, it needs a healthy dose of money printing.”
Hayes believes that in this crisis-like situation, the US central bank may intervene soon by creating an additional dollar reserve. Later, banks like JPMorgan would sell their USD for yen, and would further use this yen for the purchase of JGBs. This would eventually help to reduce the Japanese bond yields.
In another liquidity injection move, the US Treasury repurchased $735 million of its outstanding debt, according to official data. This buyback is viewed as a liquidity-supportive move and can help free up cash, thereby allowing funds to circulate back into broader financial markets.
Falling US Dollar Index Can Also Aid BTC Upside
The US Dollar Index (DXY) fell to 95.6 on Jan. 27, its lowest level in four years. Over the past year, the greenback currency has dropped more than 10%, leading to a strong rally in precious metals like Gold and Silver.
Billionaire investor Tim Draper said Bitcoin remains an attractive trade against the US dollar. According to Draper, this could support the broader crypto market rally, as he stays firm with his $250,000 BTC price target.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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Source: https://www.coinspeaker.com/hayes-bitcoin-upside-us-fed-japan-bond/
