Arthur Hayes says Bitcoin rally hinges on bank and Fed balance sheets

Key points

• Hayes posted on X on 2 Nov that he expects Bitcoin weakness until the Fed or banks start growing their balance sheets.
• He argues new commercial lending can create dollar deposits without any Fed asset purchases.
• Hayes has separately said he expects Bitcoin to reach $1m eventually and sees a bull run driven by money creation.

Arthur Hayes has tied a Bitcoin rally to balance sheet growth at commercial banks or the Federal Reserve, saying dollar liquidity is rebuilding but that the cryptocurrency may stay weak until either starts expanding. The Bitmex co-founder, now chief investment officer at Maelstrom, made the assessment on X on 2 Nov, Bitcoin.com News reports.

His argument rests on dollar liquidity, meaning the funding and credit available for spending and investment.

Commercial bank lending offers a route to that expansion without the Fed. Central bank asset purchases work through a separate channel, and a January Fed staff analysis noted that rises in Treasury cash or reverse repurchase balances reduce reserves unless offset.

Hayes has made similar points before. In April he warned that credit stress could cap a sustained rally until policymakers supplied liquidity. He has also endorsed Bitcoin eventually reaching $1m and, on 8 Oct, forecast a major crypto rally driven by money creation.

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