Arthur Hayes Warning: 'Invisible QE' Could Restart, Potentially Igniting the Next Bitcoin Bull Market

BlockBeats News, November 4th, BitMEX co-founder Arthur Hayes released a new article stating that the U.S. Treasury and the Federal Reserve are brewing a "Stealth QE," which could become a key catalyst driving a new round of Bitcoin and crypto market surge.

Currently, U.S. government spending continues to expand, and political incentives lead them to prefer debt issuance over taxation. Foreign central banks, due to the risk of their dollar assets being seized after the Russia-Ukraine war, are more inclined to buy gold rather than U.S. bonds. The U.S. private savings rate is not sufficient to support bond issuance, while the four major commercial banks only absorb a small portion of new bonds. "Relative Value (RV) hedge funds" have become marginal buyers of U.S. bonds, mainly leveraging repurchase agreements (repos) to purchase U.S. bonds.

The U.S. Treasury is expected to issue about $2 trillion in new bonds annually to cover the deficit. When market liquidity is tight and the SOFR (Secured Overnight Financing Rate) exceeds the federal fund's upper limit, the Federal Reserve directly injects cash into the market through the Standing Repo Facility (SRF). This is equivalent to "covert QE": printing money → lending → supporting the bond market.

As the SRF usage increases, global dollar liquidity rises, with the actual effect equivalent to QE. Hayes predicts that this will reignite the bull market cycle of Bitcoin and the crypto market. "Whenever the Fed expands its balance sheet, BTC will rise."

Currently, during the U.S. government shutdown and Treasury auction period, there is a short-term liquidity tightening, putting pressure on the crypto market. Hayes advises investors to "preserve capital and wait for opportunities", stating that the market will experience a strong rebound after the "Stealth QE launch."