Video Title: The Godfather Of Crypto Trading: My Final Warning To Bitcoin Holders
Video Source: Altcoin Daily
Compiled by: Peggy, BlockBeats

Editor’s Note: On August 19, the U.S. Department of the Treasury announced that, starting September 9, the maximum amount for single-transaction liquidity support repos for 10- to 30-year long-term U.S. Treasury bonds will be increased from $2 billion to at least $4 billion. Although the policy scale is not large compared with the U.S. Treasury market of more than $30 trillion, after the announcement was released, long-term U.S. Treasury yields fell rapidly, the U.S. dollar weakened, and Bitcoin once again broke above $70,000.

There are two explanations for this rebound. One attributes it to Trump pushing for legislation on crypto market structure; the other believes what truly changed market pricing was the U.S. Treasury’s policy sensitivity to rising long-term yields. In other words, it may not be that the market is trading the $4 billion buyback itself, but rather what the Treasury and the Federal Reserve will do after U.S. Treasury yields keep rising.

In an interview with Altcoin Daily, Arthur Hayes chose the latter interpretation. In his view, Bitcoin is a "pressure release valve" for global liquidity changes: when the market starts worrying that the U.S. will use larger-scale buybacks, expand the Fed’s balance sheet, or even use yield curve control to suppress long-term funding costs, scarce assets will regain buying demand.

Readings: (Arthur Hayes latest interview: ETH sees $30,000; FLOP will surpass ETH)

This is still a macro scenario built around a distinctly personal stance. The Treasury emphasizes that the goal of buybacks is to improve market liquidity for long-term Treasuries, not to directly release money; the Fed also hasn’t announced yield curve control. Whether Hayes’s judgment holds ultimately depends on whether buybacks continue to be expanded in size, whether long-term interest rates move back toward the policy pressure zone, and whether the Fed truly expands its balance sheet.

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

On August 19, the U.S. Treasury announced that the single-transaction liquidity-support buyback size for nominal interest-bearing Treasuries with maturities of 10 to 20 years and 20 to 30 years will be increased from up to $2 billion to at least $4 billion. The new arrangement will take effect on September 9 and run through November 4.

Before the news was released, U.S. 30-year Treasury yields briefly rose to about 5.34%, the highest level since 2007. After the announcement, long-term Treasury yields briefly fell by about 10 basis points, and the dollar weakened in tandem. Bitcoin then broke through $70,000 for the first time since June, and related crypto stocks generally rose as well.

In an interview with Altcoin Daily, Arthur Hayes believes the key clue behind Bitcoin’s rise is not within the crypto industry itself, but in the U.S. Treasury market.

$400 million isn’t big—the market is trading the policy signal

The U.S. Treasury increasing the size of a single long-term Treasury buyback from $2 billion to at least $4 billion is, by itself, not enough to significantly change the supply-demand structure of the Treasury market. Hayes also acknowledges that this is not a figure sufficient to directly create large-scale liquidity.

What he cares about more is the timing of when the buyback expansion is announced.

After long-term Treasuries were hit by selling and the 30-year yield rose to a near 20-year high, the Treasury quickly increased the pace of buybacks. In Hayes’s view, this signals the "pain point" for policymakers on long-term interest rates: when rising yields begin to threaten government borrowing costs and the stability of financial markets, the Treasury may take more proactive action.

"The scale isn’t surprising, but it’s a signal," Hayes said.

The Treasury’s official definition of this operation is "liquidity-support buybacks," mainly used to buy back older bonds with poorer buyback liquidity to improve trading conditions in the Treasury market. It is not the same as quantitative easing by the Fed, and it does not necessarily increase the net amount of dollars in the market.

Therefore, more precisely, the buyback announcement does not directly prove that the U.S. has restarted "money printing," but it reinforces a market expectation: if long-term interest rates continue to run out of control, policy tools may be upgraded further.

Hayes’s Bitcoin logic: from Treasury pressure to liquidity expansion

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

His logic can be broken into three steps: U.S. debt and interest expenses keep rising, and the Treasury needs to maintain the ability of the Treasury market to fund itself. If long-term Treasuries lack buyers and yields keep climbing, policymakers may stabilize the market by expanding buybacks or using other tools. Once these actions ultimately increase dollar liquidity, Bitcoin with a fixed supply becomes a potential beneficiary.

Under this framework, Bitcoin’s rise is not the result of $4 billion flowing directly into the crypto market; instead, investors trade ahead of time for a future, more accommodative liquidity environment.

Hayes thinks what really needs attention is yield curve control, i.e., "yield curve control." It refers to policymakers maintaining Treasury yields near a target level by buying bonds of specific maturities. The U.S. is not currently implementing this policy, but Hayes judges that if long-term yields continue to rise, the market will raise expectations of implicit or explicit yield curve control.

He further said that once the market confirms the Fed will expand its balance sheet at a large scale, Bitcoin could quickly move into the "hundreds of thousands" range. He expects Bitcoin could rise to about $126,000 by the end of the year; if policy clearly shifts toward yield curve control, it could move even faster toward $500,000.

An even more aggressive scenario: foreign holders sell, and the Federal Reserve steps in to buy

Compared with a Treasury buyback, Hayes is more focused on the FIMA Repo Facility—"the Foreign and International Monetary Authorities Repo Facility."

This tool allows eligible foreign central banks and international institutions to obtain dollar liquidity from the Fed using the U.S. Treasuries they hold as collateral. Hayes’s scenario suggests that Japan and European countries may in the future need to sell some U.S. assets, repatriate the funds to their home countries, and use them for fiscal, defense, and social spending. If the main overseas holders of Treasuries shift from buyers to sellers, long-term Treasury yields could face further downward pressure.

In his scenario, the U.S. might expand the FIMA repo facility, allowing overseas official institutions to obtain dollars in exchange for U.S. Treasuries. Then they would sell the dollars in the FX market and buy back their domestic currency. This could both reduce direct selling pressure on the Treasury market and, through the Fed’s balance sheet absorbing some of the liquidity demand, potentially help as well.

However, this part is mainly Hayes’s speculation about future policy paths. Existing public information has not confirmed that the Fed will remove the trading limits of the FIMA tool, nor has it announced that it would use that tool to absorb indefinitely the U.S. Treasuries sold by foreign investors.

So the "unlimited money printing" Hayes mentions has not happened yet. It represents the extreme scenario he believes policy could ultimately head toward.

Why is Bitcoin more important than regulatory “good news”?

In the interview, Altcoin Daily also asked about how U.S. crypto market-structure legislation affects the market. Hayes responded cautiously, even saying the CLARITY Act is not important for Bitcoin’s price.

The CLARITY Act aims to clarify whether digital assets are securities or commodities and to divide regulatory authority between the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. For companies that need to raise funds in the U.S., issue tokens, and conduct trading operations, clearly defining regulatory boundaries does have real-world significance.

But Hayes believes that since Bitcoin has been running from 2009 to today, it does not depend on the U.S. building a dedicated regulatory framework for it. Compared with Congress passing a crypto bill, how the U.S. Treasury and the Fed handle debt, interest rates, and dollar liquidity has a more direct impact on Bitcoin’s valuation.

This assessment also explains his attribution for this cycle’s price action. Trump’s push for the CLARITY Act and the Treasury’s expansion of buybacks happened almost simultaneously, and both could improve market sentiment. But Hayes believes the variable that truly makes Bitcoin rebound quickly is that investors start reassessing how tolerant U.S. policy policymakers are toward long-term interest rates.

Reuters cited analysts who say the Treasury’s operation size is relatively limited and the relief to the bond market is also short-lived. However, given the backdrop of a narrow trading range and the accumulation of short positions, this signal triggered short covering in the crypto market, amplifying the price rally.

This means the current Bitcoin surge can be explained by multiple factors together: falling Treasury yields reduce the opportunity cost for risk assets; a weaker dollar improves the liquidity environment; regulatory-related news boosts industry expectations; and short covering magnifies short-term volatility. Attributing all the gains solely to the Treasury buyback also makes it easy to overestimate the impact of a single event.

What to watch next: long-term Treasury yields around 5%

The key indicator Hayes points to is not Bitcoin’s technical chart pattern, but U.S. long-term Treasury yields.

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

If buyback sizes keep increasing, the Fed’s balance sheet re-expands, and the dollar continues to weaken, Hayes’s liquidity-trading framework will be reinforced. Bitcoin may then continue to be viewed as a scarce asset that hedges money expansion and sovereign-debt risk.

On the other hand, if long-term returns naturally drift back, buybacks stay at the level of liquidity management, and the Federal Reserve does not expand its balance sheet, then interpreting the $4 billion buyback as a prelude to yield curve control could be an over-extrapolation.

Therefore, what this interview is really about is not whether Bitcoin will end the year at $126,000 or $500,000. Hayes’s core question is: when the Treasury market again approaches the policy pressure zone, will the U.S. allow long-term interest rates to rise freely, or will it stabilize the market with more liquidity?

Bitcoin is already trading the second possibility ahead of time.

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