Bitcoin (BTC) has entered a new bull market, according to Arthur Hayes, who argues that US Treasury Secretary Scott Bessent is preparing to create more dollar liquidity through Treasury market operations.
The thesis rests on a familiar argument of his: when policymakers inject liquidity to keep Treasury yields under control, Bitcoin and other risk assets tend to benefit.
Hayes Points to Bessent’s Treasury Strategy
In an August 25 essay, Hayes compared Bessent with his predecessor, Janet Yellen, arguing that both have faced pressure to keep borrowing costs under control while the US government continues spending. He focused on the 10-year Treasury yield, which, as he put it, is the most important price in US financial markets.
According to the BitMEX co-founder, regulators tend to get nervous whenever the yield on the 10-year Treasury is near 5% because higher yields tend to increase the cost of mortgages and borrowing for corporations and consumers, which could have an impact on the economy.
He went back to December 2023, when Yellen boosted the issuance of Treasury bills compared to long-duration Treasury bonds, allowing money market fund balances to move from the Fed’s Reserve Repo program to T-bills.
Hayes estimates that the RRP balance fell from roughly $2.5 trillion to $100 billion by the time Bessent took office in January 2025. He also described the resulting $2.4 trillion movement as a liquidity injection that flowed into financial markets that saw Bitcoin and the Nasdaq 100 both rallying while the 10-year yield moved away from 5%, even though the Federal Reserve kept rates near 5.3% and continued shrinking its balance sheet.
Bessent is now attempting something similar through the Treasury’s debt-management tools. Recall that on August 19, he announced that buybacks would increase from $2 billion to at least $4 billion per operation. Ten-year yields initially fell, while Bitcoin rallied over the following days. However, the effect did not last, and by the following trading session, the 10-year yield had climbed back above its pre-announcement level.
And that’s why Hayes is contending that the Treasury’s planned purchases are too small relative to the roughly $40 trillion US debt stock.
“Bitcoin ripped off its lows after Yellen announced her money printing scheme, and I argue it will do the same after Bessent reestablished his conviction to follow in his predecessors’ footsteps and materially increase the pace of dollar liquidity creation,” he wrote.
Why Hayes Expects More Liquidity
The crypto investor laid out three paths for Bessent: cutting spending, which is unlikely given upcoming elections; an aggressive, Bank of Japan-style pledge to buy unlimited bonds if yields top 5%; or, most likely in his view, smaller and more frequent buyback increases unless volatility rises fast.
He also sees another possible source of liquidity in the Treasury General Account (TGA), which is at approximately $1 trillion, with a CNBC report suggesting that the Treasury Secretary could drain the TGA to fund additional buybacks.
All this is happening with Bitcoin having already moved considerably higher, after recently crossing $80,000 for the first time since May. While writing this piece, the OG crypto had gone back closer to $79,000 than $80,000, although the price still reflected a jump of more than 23% in seven days and slightly less than that across one month, but it remains about 37% below its October 2025 all-time high record of over $126,000.
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