Arthur Hayes, co-founder of crypto derivatives exchange BitMEX, said Bitcoin has entered a new bull market as U.S. Treasury buybacks increase dollar liquidity across financial markets. In his latest essay, Same Same But Different, published on Substack, Hayes argued that Treasury Secretary Scott Bessent's larger long-dated bond buybacks could support Bitcoin.

Hayes expects Treasury operations to remain a key liquidity tool, potentially supporting risk assets as debt pressures increase. He also disclosed that Maelstrom, his family office, now holds maximum exposure to BTC, ETH, ENA and ETHFI — Bitcoin, Ethereum, Ethena and Ether.fi — despite expected market volatility.

Hayes Links Treasury Policy to Bitcoin Liquidity

According to Hayes, Treasury market interventions can increase dollar liquidity without direct easing from the Federal Reserve. He argued that this liquidity has historically reached risk assets, including Bitcoin. The claim extends a long-running theme of Hayes's writing: that Bitcoin trades as a liquidity-sensitive risk asset, with the source of new dollars now sitting in fiscal operations rather than Fed easing.

Hayes compared Bessent's approach to former Treasury Secretary Janet Yellen's 2023 Treasury issuance strategy. During that period, Yellen increased short-term bill issuance while reducing longer-duration borrowing. Hayes said money market funds moved capital from the Federal Reserve's Reverse Repo Program — the facility where money funds park excess cash overnight — into Treasury bills, and according to his essay, the RRP balance later declined from roughly $2.5 trillion to $100 billion.

He argued that this shift released substantial liquidity into financial markets. Hayes noted that Bitcoin and the Nasdaq 100 both rose during that period while yields retreated.

Bessent Expands Long-End Treasury Buybacks

The Treasury restarted regular buybacks of outstanding securities in 2024, its first such program since 2002, with the stated aim of improving trading liquidity in older, off-the-run issues. Against that backdrop, Hayes said Bessent announced larger Treasury buybacks on Aug. 19, increasing long-end purchases by $20 billion. The announcement briefly pushed 10-year Treasury yields lower before they reversed higher the following session.

According to Hayes, the Treasury currently faces pressure as the U.S. debt stock approaches $40 trillion. He argued that modest buybacks may prove insufficient if yields continue rising, and outlined two possible paths for Treasury policy.

One path involves steadily expanding buybacks alongside other liquidity programs. The other involves stronger intervention if 10-year yields move above 5% — a scenario Hayes described as de facto yield-curve control through unlimited longer-dated bond purchases.

Maelstrom Moves to Maximum Market Exposure

Hayes also pointed to roughly $1 trillion held inside the Treasury General Account, the government's day-to-day operating account at the Federal Reserve. He said Bessent could potentially deploy those funds toward additional buybacks, citing recent CNBC reporting.

However, Hayes said he does not expect immediate Federal Reserve rate cuts or unlimited quantitative easing. Instead, he expects Treasury operations to remain the primary liquidity tool. The signposts in his thesis are the size of future buyback announcements, the Treasury General Account balance and whether the 10-year yield approaches the 5% threshold he flagged.

Hayes added that Bitcoin's bull market could include sharp volatility and significant corrections. Despite that expectation, he said Maelstrom has moved to maximum risk. The investment firm currently holds major exposure to Bitcoin, Ethereum, Ethena and Ether.fi, according to Hayes.