Editor's Note: On August 19, the U.S. Treasury Department announced that, starting September 9, it would increase the single liquidity support repurchase ceiling for 10- to 30-year long-term Treasury bonds from $2 billion to at least $4 billion. While the scale of this policy is not large relative to the more than $30 trillion U.S. Treasury market, following the announcement, long-term U.S. bond yields quickly fell back, the dollar weakened, and Bitcoin broke through $70,000 again.

This rebound has thus spawned two interpretations. One attributes it to Trump's push for crypto market structure legislation, while the other argues that what truly changed market pricing was the U.S. Treasury's demonstrated policy sensitivity to rising long-term interest rates. In other words, investors might not be trading the $4 billion repurchase itself, but rather speculating on what actions the Treasury and the Fed might take if Treasury yields continue to rise.

Arthur Hayes, in an interview with Altcoin Daily, chose the latter explanation. In his view, Bitcoin acts as a 'pressure release valve' for changes in global liquidity: when the market begins to worry that the U.S. will take measures such as larger-scale repurchases, expansion of the Federal Reserve's balance sheet, or even yield curve control to lower long-term financing costs, scarce assets will once again attract buying.

Related Reading: Arthur Hayes' Latest Interview: ETH to $30,000; FLOP Will Surpass ETH

This remains a macro narrative with a distinct personal stance. The Treasury emphasizes that the goal of the repurchases is to improve the market liquidity of long-term Treasuries, not to directly release currency; the Fed has also not announced yield curve control. Whether Hayes's judgment holds ultimately depends on whether repurchases continue to expand in scale, whether long-term interest rates approach the policy pressure interval again, and whether the Fed actually expands its balance sheet.

Below is a compiled and translated summary of key information from the original text:

On August 19, the U.S. Treasury Department announced it would increase the single liquidity support repurchase size for 10- to 20-year and 20- to 30-year nominal coupon-bearing Treasury securities from a maximum of $2 billion to at least $4 billion. The new arrangement will take effect on September 9 and last until November 4.

Before the announcement, the yield on the U.S. 30-year Treasury bond once rose to about 5.34%, hitting a new high since 2007; after the announcement, long-term U.S. bond yields retreated by about 10 basis points, and the dollar weakened simultaneously. Bitcoin subsequently broke through $70,000, the first time since June, and related crypto stocks also rose broadly.

In the Altcoin Daily interview, Arthur Hayes argued that the core clue to Bitcoin's rise lies not within the crypto industry itself, but in the U.S. Treasury bond market.

$4 Billion Is Not Huge; The Market Is Trading The Policy Signal

The U.S. Treasury's increase in single long-term bond repurchase size from $2 billion to at least $4 billion is itself insufficient to significantly alter the supply-demand structure of the Treasury market. Hayes also acknowledges this is not a number large enough to directly create massive liquidity.

He is more concerned with the timing of the repurchase expansion announcement.

After long-term Treasuries faced selling pressure and the 30-year yield climbed to a nearly two-decade high, the Treasury quickly increased its repurchase efforts. In Hayes's view, this demonstrates to the market the policy establishment's 'pain point' regarding long-term interest rates: when yield increases begin to threaten government financing costs and financial market stability, the Treasury may adopt more proactive interventions.

'The size is not staggering, but it is a signal,' Hayes said.

The Treasury's official definition of this operation is 'liquidity support repurchase,' primarily used to repurchase older, less liquid securities to improve Treasury market trading conditions. It is not equivalent to Federal Reserve quantitative easing and does not necessarily increase the net amount of dollars in the market.

Therefore, more accurately, the repurchase announcement does not directly prove that the U.S. has restarted 'money printing,' but it strengthens a market expectation: if long-term interest rates continue to spiral out of control, policy tools may escalate further.

Hayes's Bitcoin Logic: From Treasury Pressure to Liquidity Expansion

Hayes views Bitcoin as the most direct 'pressure release valve' when central banks expand the money supply.

His logic can be broken down into three steps: U.S. debt and interest payments are continuously increasing, and the Treasury needs to maintain the financing capacity of the Treasury market; if long-term Treasuries lack buyers and yields continue to rise, policymakers may use expanded repurchases or other tools to stabilize the market; once these operations ultimately lead to an increase in dollar liquidity, Bitcoin, with its fixed supply, will become a potential beneficiary.

Under this framework, Bitcoin's rise does not stem from the $4 billion repurchase directly flowing into the crypto market, but from investors front-running the possibility of a more accommodative liquidity environment in the future.

Hayes believes the real focus should be on yield curve control. This refers to policymakers maintaining Treasury yields near target levels by purchasing bonds of specific maturities, among other methods. The U.S. is not currently implementing this policy, but Hayes judges that if long-term yields continue to rise, the market will increase expectations for implicit or explicit yield control.

He further stated that once the market confirms the Fed will massively expand its balance sheet, Bitcoin could quickly enter the 'hundreds of thousands of dollars' range. He predicts Bitcoin could rise to around $126,000 by year-end; if policy clearly turns towards yield curve control, it might surge towards $500,000 even faster.

A More Aggressive Scenario: Foreign Holders Selling, The Fed Buying

Compared to Treasury repurchases, Hayes pays more attention to the FIMA Repo Facility, or the 'Foreign and International Monetary Authorities Repo Facility.'

This facility allows eligible foreign central banks and international institutions to obtain dollar liquidity from the Federal Reserve, using their held U.S. Treasuries as collateral. Hayes speculates that countries like Japan and in Europe may need to sell some U.S. assets in the future, repatriating funds to their own countries for fiscal, defense, and social spending. If major foreign holders of U.S. Treasuries shift from buyers to sellers, long-term Treasury yields may face further pressure.

In his envisioned scenario, the U.S. might expand the FIMA Repo Facility, allowing foreign official institutions to exchange Treasuries for dollars, then sell dollars and buy back their own currencies in the foreign exchange market. This could both alleviate direct selling pressure in the Treasury market and potentially absorb some liquidity demand through the Fed's balance sheet expansion.

However, this part is mainly Hayes's speculation on future policy paths. Existing public information does not confirm that the Fed will remove transaction limits for the FIMA tool, much less announce using it to unlimitedly absorb U.S. Treasuries sold by foreign investors.

Therefore, the 'unlimited money printing' Hayes mentions has not yet occurred. It represents the extreme scenario he believes policy may ultimately head towards.

Why Is Bitcoin More Important Than Regulatory Tailwinds?

In the interview, Altcoin Daily also asked about the impact of U.S. crypto market structure legislation on the market. Hayes was cautious in his evaluation, even suggesting that the CLARITY Act is not important for Bitcoin's price.

The CLARITY Act seeks to clarify whether digital assets are securities or commodities and delineate the regulatory authority between the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. For companies needing to raise funds, issue tokens, and operate trading businesses in the U.S., clear regulatory boundaries indeed hold practical significance.

But Hayes argues that Bitcoin, having operated since 2009, does not rely on the U.S. establishing a specialized regulatory framework for it. Compared to Congress passing a crypto bill, how the U.S. Treasury and Fed handle debt, interest rates, and dollar liquidity has a more direct impact on Bitcoin's valuation.

This judgment also explains his attribution of this rally. Trump's push for the CLARITY Act and the Treasury's repurchase expansion happened almost simultaneously; both could have improved market sentiment. But Hayes believes the variable that truly caused Bitcoin's rapid rebound is investors starting to reassess the U.S. policy establishment's tolerance for long-term interest rates.

Reuters cited analyst views stating that the Treasury's operation is relatively limited in scale, and its relief for the bond market is also relatively short-lived; however, against a backdrop of narrow recent trading ranges and accumulated short positions, this signal triggered short-covering in the crypto market, amplifying price gains.

This means Bitcoin's recent rise can be explained by multiple factors: the decline in U.S. bond yields reduced the opportunity cost for risk assets, dollar weakness improved the liquidity environment, regulatory news boosted industry expectations, and short covering amplified short-term volatility. Attributing all gains solely to the Treasury repurchase similarly risks overestimating the impact of a single event.

What to Watch Next: Long-Term Bond Yields Around 5%

The core observation indicator Hayes provides is not Bitcoin's technical chart, but U.S. long-term Treasury bond yields.

He believes recent policy reactions indicate the U.S. Treasury has become more sensitive to the rapid rise in long-term yields. If the 10-year yield approaches 5% and the 30-year yield challenges highs again, the market will observe whether the Treasury continues to expand repurchases and whether the Fed introduces new liquidity tools.

If repurchase sizes continue to increase, the Fed's balance sheet expands again, and the dollar continues to weaken, Hayes's liquidity trading framework will be strengthened. Bitcoin may then continue to be viewed as a scarce asset hedging against monetary expansion and sovereign debt risk.

Conversely, if long-term yields fall back on their own, repurchases remain at the level of liquidity management, and the Fed does not expand its balance sheet, then interpreting the $4 billion repurchase as a prelude to yield curve control may be an over-interpretation.

Therefore, the core question this interview truly discusses is not whether Bitcoin will reach $126,000 or $500,000 by year-end. The core question Hayes raises is: when the Treasury market once again approaches the policy pressure interval, will the U.S. allow long-term interest rates to rise freely, or will it use more liquidity to stabilize the market?

Bitcoin is already front-running the second possibility.

[Video Link]