BitMEX founder Arthur Hayes stated that potential steps by the US and Japan to support the yen could increase global dollar liquidity, which may potentially lead to a strong rise in Bitcoin and the overall cryptocurrency market.
In his assessment shared via X, Hayes outlined three different scenarios that could be implemented to support the Japanese yen. The first is an aggressive interest rate hike by the Bank of Japan (BOJ). However, Hayes noted that this option may be limited due to its potential impact on the Japanese economy.
The second scenario involves the sale of foreign assets by institutions such as Japan's Government Pension Investment Fund (GPIF) and the reinvestment of the proceeds into domestic assets. Such a move is believed to potentially alleviate pressure on the yen.
The third option proposed by Hayes is for Japan's Ministry of Finance to obtain dollar liquidity from the Federal Reserve, using its US Treasury bonds as collateral. Hayes stated that Japan could then sell the acquired dollars on the foreign exchange market and buy yen, arguing that US and Japanese officials are more favorable towards this method.
According to Hayes, if the US Treasury expands the limits under the Fed's FIMA Repo facility, Japan could more actively counter the yen's devaluation using its holdings of US Treasury bonds.
Hayes stated that this process could increase global dollar liquidity and that the resulting increase in liquidity could be a significant catalyst for the growth of Bitcoin and other cryptocurrency assets.
Hayes's assessment shows that the cryptocurrency market is highly sensitive not only to direct changes in the crypto world but also to central bank monetary policies, currency markets, and global liquidity conditions. However, it is noted that these scenarios are not necessarily guaranteed to materialize, and their impact on Bitcoin would depend on how the liquidity is managed.
*This is not investment advice.
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