Bitcoin Rally on Hold? Arthur Hayes Reveals What Could Change Everything

TLDR

• Arthur Hayes said the next Bitcoin rally depends on the U.S. government ending its shutdown.
• He explained that renewed liquidity from government spending could push Bitcoin to a new all-time high.
• Hayes stated that expanding the Federal Reserve’s balance sheet increases dollar supply and supports crypto prices.
• He mentioned that the Treasury General Account is holding excess funds that restrict liquidity in the market.
• Hayes believes that once the shutdown ends, the release of these funds will reignite the Bitcoin rally.

The crypto market weakened as Bitcoin (BTC) price fell below $100,000 on Tuesday, sparking renewed debate about the current bull cycle. Market analyst Arthur Hayes said the end of the U.S. government shutdown could restart the Bitcoin rally. He explained that renewed liquidity from government spending could push Bitcoin to a new all-time high.

U.S. Liquidity and Market Conditions

Arthur Hayes argued that dollar liquidity remains the main driver of the ongoing Bitcoin rally. He explained that government borrowing expands the Federal Reserve’s balance sheet and increases the supply of money in circulation. This liquidity, he said, typically flows into risk assets like Bitcoin.

He wrote in his article “Hallelujah” that, “If the U.S. government ensures ample cash, BTC will reach another all-time high.” Hayes believes the government will continue issuing debt rather than raising taxes to fund its programs. He stated that this approach helps maintain the flow of liquidity that supports the Bitcoin rally.

The trader explained that various market participants contribute to liquidity growth by buying Treasury bills consistently. These include money market funds, foreign central banks, large commercial banks, and hedge funds. Hayes emphasized that these purchases help expand the overall money supply, which usually benefits Bitcoin prices.

Shutdown Impact on the Bitcoin Rally

However, the current government shutdown has disrupted the normal flow of liquidity into financial markets. Hayes said the Treasury continues borrowing but cannot release funds due to the shutdown. As a result, liquidity remains trapped, slowing the Bitcoin rally.

He noted that the Treasury General Account now holds about $1 trillion, exceeding its $850 billion target. The excess balance means less cash is available in markets, reducing dollar liquidity. Hayes described this as a temporary drain that suppresses the ongoing Bitcoin rally.

According to him, once the shutdown ends, the Treasury will inject this withheld liquidity into the financial system. He stated that this release will improve dollar circulation and reignite the Bitcoin rally. Hayes predicted that many traders might sell early, but the liquidity shift will favor long-term holders.

Hayes’ Outlook on Market Behavior

Hayes expects volatile market conditions to persist while the shutdown continues. He advised that short-term declines are possible but temporary. He emphasized that “the dollar money market plumbing is rarely wrong.”

He said traders dumping holdings during weakness may miss the upcoming rebound. Hayes believes liquidity expansion remains a consistent signal for the next Bitcoin rally. He reiterated that the end of the shutdown will unlock the cash needed to push Bitcoin higher.

The analyst concluded that government spending will likely resume soon, restoring positive liquidity momentum. He suggested that such an outcome could lift Bitcoin back to new highs within the current cycle. Hayes maintains that macro liquidity, not sentiment, will decide when the next Bitcoin rally begins.

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