Arthur Hayes calls a new Bitcoin bull market as dollar liquidity surges

In a recent Substack post, Arthur Hayes argued that Treasury Secretary Scott Bessent's decision to double long-dated bond buybacks is creating the same dollar liquidity conditions that sent Bitcoin surging in late 2023.

"Bitcoin obviously got the message because it is the global liquidity smoke alarm," Hayes wrote in the post. "If Bessent is Yellen 2.0 then Bitcoin is about to go on a monster run off the lows."

The Yellen parallel

Hayes argues that both Yellen and Bessent faced the same structural problem, a 10-year Treasury yield threatening to breach 5%.

At that level, Hayes writes, "consumer and corporate financing become prohibitively expensive, and economic activity slows down." Both secretaries responded with what Hayes calls "clever money printing stratagem."

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Yellen's move in late 2023 was to issue more Treasury bills than bonds, draining $2.4 trillion from the Federal Reserve's Reverse Repo Program into financial markets. Bitcoin and the Nasdaq pumped.

The 10-year yield retreated from 5%. Bessent's equivalent move came on Aug 19, when he announced he would double long-dated bond buybacks, increasing the quarterly total by $20 billion.