Arthur Hayes: The increase in US dollar liquidity will drive up Bitcoin and cryptocurrencies

Arthur Hayes posted on the X platform stating that his article "Yen-quake" will introduce how Buffalo Bill Bessent plans to manipulate the USD/JPY exchange rate and restart the currency printing press. Arthur Hayes mentioned that the continuous weakening of the yen over the past decade has driven up global asset markets, but this situation will eventually come to an end. The yen is the lowest valued currency globally and is also a focal point of controversy among the two major powers, the United States and China, as well as ordinary Japanese voters.

There are three ways to address the yen issue, but the U.S. Treasury and Japanese politicians only lean towards one of them. He will explain the operational mechanisms of each method for yen appreciation and why the last option is the preferred solution; he will also discuss how to politically implement the third option. He stated that as U.S. dollar liquidity rises significantly, Bitcoin and cryptocurrencies will increase.

The three options include: 1. The Bank of Japan significantly raises interest rates, eliminating the interest rate differential between the dollar and the yen at least on the short end. 2. The government persuades domestic institutions and public entities like GPIF to change their investment mandates, selling overseas assets and buying local assets. 3. Preferred option: The Japanese Ministry of Finance hands over its U.S. Treasury holdings to the Federal Reserve through repurchase transactions in exchange for dollars; subsequently, it sells dollars in the foreign exchange market and buys yen.

Arthur Hayes stated that before delving into details, speculators should consider why the discussion of yen appreciation is happening now. For decades, many have claimed that the yen was about to appreciate, leading to the unwinding of global carry trades. Two weeks ago, monetary policy officials from the U.S. and Japan conducted a joint currency manipulation action, merely referring to it as intervention. U.S. Treasury Secretary Buffalo Bill Bessent expressed a desire to raise the counterparty limit for the FIMA repurchase mechanism so that the Japanese Ministry of Finance could utilize its vast asset reserves to defend the yen. The Japanese Ministry of Finance also stated that it is closely cooperating with the U.S. to promote a decline in the USD/JPY exchange rate. Relevant officials are conveying to the market that they support changes in global currency relations, and thus the market must pay attention to this.