Arthur Hayes Predicts Stealth QE Will Boost Crypto Market

Arthur Hayes suggests that the next phase of the crypto cycle will be influenced by a "stealth" quantitative easing (QE) through the Federal Reserve's Standing Repo Facility (SRF), rather than a direct policy shift. He argues:

The persistent US fiscal deficits and hedge-fund demand for Treasuries will increase dollar liquidity, boosting prices of [Bitcoin](https://holder.io/coins/btc/) and other cryptocurrencies.
The government prefers borrowing over savings to fund spending, leading to significant Treasury debt issuance.
Foreign central banks are less likely to buy US Treasuries due to geopolitical risks, such as the US freezing Russian assets in 2022.
US households and banks have limited capacity to absorb new Treasury issues.
Hedge funds, especially those operating via Cayman Islands, are key buyers, leveraging repo financing.
The SRF will act as a backstop when repo markets face stress, effectively increasing the money supply.

Implications for the Crypto Market

Hayes predicts that as SRF balances grow, so will fiat dollars, potentially reigniting a [Bitcoin](https://holder.io/coins/btc/) bull market.
The current softness in crypto markets is partly due to liquidity being held in the Treasury General Account during the government shutdown.
He emphasizes monitoring money-market structures over traditional indicators like CPI or FOMC announcements.

At the time of reporting, the total crypto market cap stood at $3.41 trillion.

Total crypto market cap