Arthur Hayes Says Fed’s Yen Rescue Could Send Bitcoin, Gold and Ether Higher

BitMEX co-founder Arthur Hayes believes a Federal Reserve-backed rescue of the Japanese yen could become an unexpected catalyst for Bitcoin, gold, and Ether to rally. 

He says that the move could inject new U.S. dollar liquidity into global markets, potentially creating new buying pressure for major crypto assets.

How a Yen Rescue Could Add More Dollars to the Market

According to Arthur Hayes, Japan is facing two big problems. Firstly, the yen is getting weaker, and, secondly, Japanese government bond yields are rising.

If Japan raises interest rates too much to support the yen, it could trigger a major market shock by unwinding the global yen carry trade. If it sells its large holdings of U.S. Treasury bonds to buy yen, U.S. bond yields could also jump.

To avoid these problems, Hayes says Japan could use the Fed’s Foreign and International Monetary Authorities (FIMA) Repo Facility. 

Instead of selling its U.S. government bonds, Japan can use them as collateral to borrow newly created U.S. dollars from the Fed.

Because the Fed creates new dollars to provide these loans, Hayes says the process works much like quantitative easing (QE) and adds more liquidity to global markets.

Recently, the U.S. and Japan have already discussed ways to support the yen, while U.S. Treasury Secretary Scott Bessent has said it is reasonable for the Fed to consider increasing the size of its FIMA facility.