Arthur Hayes: ETH Expected to Rise to $10,000 This Year, Fed's Balance Sheet Expansion Will Inject Liquidity into Crypto Market

On September 3, Arthur Hayes, co-founder of BitMEX, stated in his latest article that his current macro trading "North Star" is the EUR/JPY exchange rate, which he expects to drop from the current level of around 185 to 140 or lower by June next year. He believes that U.S. Treasury Secretary Scott Bessent is pushing for a weaker dollar against the yen while guiding funds back to Japan and other Asian countries through policy, which will put pressure on European assets. Hayes noted that France's high fiscal deficit and increasing government debt, coupled with its reliance on foreign capital, make it the most vulnerable link in the Eurozone, with French banks and the government bond market likely facing continued outflow pressure.

Hayes further pointed out that Japanese companies are being urged to accelerate the repatriation of overseas funds, which will strengthen the yen and may lead Japanese and other Asian investors to reduce their holdings of European assets. As French government bonds and bank debts are sold off, French banks, especially globally systemically important banks, may reduce their repo financing activities. If French banks withdraw from part of the repo market, it could raise the financing costs of U.S. Treasuries and force hedge funds to deleverage, thereby prompting the New York Fed to expand its repo market operations (RMP), potentially accelerating the Fed's balance sheet expansion to nearly $10 billion per month.