Arthur Hayes predicts crypto boost amid US-Japan banking crisis and monetary policies

In Japan, a crisis is on the horizon. Due to the fact that the Bank of Japan has maintained low interest rates, Japanese banks have been purchasing US Treasury bonds for a number of years in order to make the most of the higher yields that these bonds offer.

In spite of this, the dynamics have shifted over the past few years, and Japanese banks are selling their bonds in a wave of panic. An expert on the market and a former CEO of BitMEX, Arthur Hayes, believes that the events that are to come will undoubtedly cause Bitcoin to reach new heights.

A crypto boost?

Hayes, who was one of the co-founders of BitMEX, which at one point in time was the largest Bitcoin derivatives exchange in the world, recently published a blog post in which he discussed his perceptions regarding the impending crisis.

As a result of the rise in interest rates in the United States and the subsequent decline in bond prices, Hayes notes that a number of Japanese banks have been investing billions of dollars in US bonds and are now facing massive losses.

Just recently, the fifth largest bank in Japan disclosed that it intended to sell bonds worth 63 billion dollars that were issued by the United States. A significant portion of the over $850 billion that Japanese banks collectively hold, the majority of which is invested in US bonds, is poised to be released onto the market.

The United States bond market would be utterly destroyed if such enormous sums were to be released onto the open market. This cannot be tolerated by the Federal Reserve, and it is anticipated that Janet Yellen will intervene.

Hayes is of the opinion that Yellen will instruct the Bank of Japan to make an offer to purchase all existing US bonds from commercial banks through direct transactions that will not have an impact on the open market.

In order to compensate the Bank of Japan, it is anticipated that Yellen will print hundreds of billions of dollars and then transfer them to the BOJ through the Foreign and International Monetary Authorities (FIMA) repo facility of the Federal Reserve.

This facility was established during the height of the COVID pandemic.

As Hayes pointed out, increasing the size of the FIMA repo facility is indicative of an increase in the amount of dollar liquidity available on the global money markets.

A rise in the FIMA repo facility indicates an addition of dollar liquidity to the global money markets. Y’all know what that means for Bitcoin and crypto … which is why I thought it necessary to alert readers about another avenue of stealth money printing.

Arthur Hayes

Consider, for the sake of simplicity, the scenario in which Caroline Ellison, the CEO of Alameda, made an offer to purchase all FTX tokens (FTT) at the current market price prior to their crash.

When it comes to the United States bonds, this is what the Bank of Japan will provide; however, in contrast to Ellison, who had only ten billion dollars available to her, the BOJ has the ability to continue buying indefinitely, as Yellen will print as many dollars as is required to prevent the collapse of the United States bonds.

The conclusion that Hayes, whose new company Maelstrom has invested in Ether.fi, Ethena, and Elixir, comes to is if the Japanese banking system dropped origami cranes made of crisply folded dollar bills onto the laps of cryptocurrency investors at the same time that many people started to wonder where the next surge of dollar liquidity would come from.

Simply put, this is yet another cornerstone of the cryptocurrency bull market.

Bitcoin is currently trading at $64,290 and has followed a sideways trend over the course of the past day, with trading volume falling by sixty percent to eight billion dollars.