Arthur Hayes Predicts $250,000 Bitcoin As Fed Caves To QE Pressure

$250,000 Bitcoin: The End of Fiat’s Reckoning 🤯💸

Oh, the humanity! 🤣 In a world where the Federal Reserve has surrendered to the fiscal behemoth, former BitMEX CEO Arthur Hayes has a prediction that will make your head spin: $250,000 Bitcoin by year-end. 🤯

Hayes’ essay is a scathing satire of the Fed’s recent policy shift, which he claims signals a structural return to fiat liquidity expansion – the perfect storm for Bitcoin and other hard assets. “Powell proved last week that fiscal dominance is alive and well,” Hayes wrote. “Therefore, I am confident QT, at least regarding treasuries, will stop in the short to medium term… Bitcoin will scream higher once this is formally announced.” 📈

QE Returns, Fiat Dies, Bitcoin Flies

Hayes centers his argument on the Federal Reserve’s March FOMC meeting, where Chair Jerome Powell suggested that balance sheet reduction would slow considerably. Powell stated: “We strongly want the MBS to roll off our balance sheet at some point. We would look closely at letting the MBS roll off but keep the overall balance sheet size constant.” 📊

This policy configuration, dubbed “QT Twist” by Hayes, implies that the Fed will reinvest MBS runoff proceeds into US Treasuries, thereby supporting bond prices while holding the nominal balance sheet steady. Hayes characterizes this as “treasury QE,” even if not labeled as such. 🤑

But don’t just take our word for it! Hayes calculates that the Fed can buy up to $420 billion in treasuries per year, with a tapering of Treasury QT from $25 billion to $5 billion per month representing an annualized $240 billion positive shift in dollar liquidity. 💸

And, in a tongue-in-cheek nod to the Fed’s political constraints, Hayes invokes a satirical dialogue in which Powell is subjected to humiliation by Treasury Secretary Scott Bessent. Powell is told: “Next week at the FOMC, you are going to start tapering QT for my treasury bonds and announce that QE for treasury bonds will start in the near future. Do you understand?” 😂

Hayes reinforces his point by drawing historical parallels to Arthur Burns, Fed Chair during the inflationary 1970s, who admitted in his 1979 speech “The Anguish of Central Banking” that political pressure rendered the Fed powerless to stop inflation. 🤦‍♂️

And, in a bold prediction, Hayes ties the Fed’s pivot to the political realities of a second Trump administration, particularly its industrial policy goals. Trump has pledged to reduce the US fiscal deficit from 7% to 3% of GDP by 2028, while reshoring manufacturing, sustaining military spending, and avoiding cuts to entitlements. 🚀

However, Hayes argues that these objectives are mathematically incompatible without central bank support, given the scale of debt issuance required. “The maths don’t add up unless Bessent can find a buyer of treasuries at an uneconomically high price or low yield. Only US commercial banks and the Fed have the firepower to buy the debt at a level the government can afford.” 💸

To unlock that capacity, Hayes anticipates the Fed will not only halt QT but also exempt banks from the Supplementary Leverage Ratio (SLR) – a key regulatory constraint limiting bank purchases of U.S. Treasuries. 📊

And, in a nod to the Fed’s love of QE, Hayes maintains that Bitcoin is uniquely positioned to benefit from this shift in monetary regime. Unlike equities, which are entangled in the legal and political architecture of the state, Bitcoin is a bearer instrument native to the digital realm, with no counterparty risk. 💻

“Bitcoin trades solely based on the market expectation for the future supply of fiat,” he wrote. “If my analysis… is correct, then Bitcoin hit a local low of $76,500 last month, and now we begin the ascent to $250,000 by year-end.” 🚀

Referencing gold’s reaction to QE1 in 2008–2009, Hayes highlights how liquidity injections can lead to delayed but explosive repricing of anti-fiat assets. In his view, Bitcoin is now playing the same role gold once did – only faster and with more direct global exposure. 💥

At press time, BTC traded at $83,500. But will it hit $250,000 by year-end? Only time (and Hayes’ crystal ball) will tell! 🔮

2025-04-01 12:42

QE Returns, Fiat Dies, Bitcoin Flies

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