Crypto Isn’t Topping Yet: Arthur Hayes Says | Crypto News
Arthur Hayes argues that the next leg of the crypto cycle can be pushed not by a headline pivot to quantitative easing, but by a “stealth” model executed through the Federal Reserve’s Standing Repo Facility (SRF). In a new essay titled “Hallelujah” printed on November 4, 2025, the previous BitMEX CEO lays out a balance-sheet-driven case that persistent US fiscal deficits, hedge-fund demand for Treasuries financed via repo, and the Fed’s need to cap funding stress will translate into incremental greenback liquidity that in the end “pumps the price of Bitcoin and other cryptos.” As he frames the core mechanism: “Government issued debt grows the money supply.”
Hayes’ logic chain begins with an remark on political incentives and the arithmetic of public finance. Governments can fund spending with “savings or debt,” and in his view elected officers “will always favor borrowing from the future to get re-elected in the present.” For the United States, he contends that the trajectory is already set: “Here are the estimates from the TBTF banksters, and a few US government agencies. As you can see, the estimates are for ~$2 trillion deficits funded by ~$2 trillion of borrowing.” In his model, once one accepts that “Yearly Federal Deficit = Yearly Treasury Debt Issuance Amount,” the next crucial query is who truly buys that debt, and on what financing.
Fed’s Stealth QE Will “Pump Crypto”
He dismisses overseas central banks as reliable marginal patrons after the US sanctioned and immobilized Russian reserves in 2022. “If Pax Americana is willing to steal Russia’s money… then no foreign owner of treasuries is ever safe,” he writes, concluding reserve managers “would rather buy gold than treasuries.” He likewise downplays the capability of the US family sector given that “the 2024 personal savings rate was 4.6%” while “the US federal deficit was 6% of GDP,” and he argues the biggest US money-center banks have elevated their Treasury holdings by only “~$300 billion” in fiscal 2025 against issuance of “$1,992 billion,” making them significant but not decisive.
Instead, Hayes positions relative-value hedge funds—notably those reserving positions via Cayman automobiles—as the marginal, price-setting bid for US length. Citing a latest Federal Reserve examine, he quotes: “Cayman Islands hedge funds purchased, on net, $1.2 trillion of Treasury securities… [between] January 2022 and December 2024… [and] absorbed 37% of net issuance of notes and bonds.” The commerce structure is simple: “Buy a cash treasury debt security vs. sell the corresponding treasury futures contract,” then lever the tiny foundation through repo funding. Because the sting is “measured in basis points,” the commerce only works if leverage is reasonable and predictable every day.
That funnel leads immediately to the SRF. Hayes lays out the Fed’s short-rate hall—“Upper and Lower Fed Funds; currently these equal 4.00% and 3.75% respectively”—and the coverage plumbing that retains market charges inside it: the Reverse Repo Facility (RRP) at the decrease sure for money-market funds (MMFs) and banks, curiosity on reserve balances (IORB) for banks in the center, and the SRF at the higher sure as the emergency spigot.
Lower Fed Funds = RRP < IORB < SRF = Upper Fed Funds,” he summarizes, including that the goal, SOFR, usually oscillates inside the band. Stress happens “when SOFR trades above the Upper Fed Funds,” which he calls “a problem” because “the filthy fiat financial system shuts down” once individuals can’t roll in a single day leverage at a steady price.
In his telling, the money provide that cushions SOFR is structurally thinner than it was when the Fed started quantitative tightening in early 2022. MMFs, he says, have drained the RRP to zero because “the T-bill rate is so attractive,” making them less obtainable as repo money suppliers. That leaves banks, who will provide liquidity so long as they’ve ample reserves, but “banks lost trillions in reserves since the Fed began QT.”
Set against that diminished provide of money is relentless demand for repo financing from RV funds, whose “marginal” Treasury purchases must be levered. If SOFR threatens to pierce the ceiling and repo turns into unreliable, the Fed’s SRF must backstop the system to stop a funding accident. “Because a similar situation occurred in 2019, the Fed created the SRF,” Hayes writes. “The Fed can supply an infinite amount of cash using its printing press at SRF as long as one provides an acceptable form of collateral.” His conclusion is blunt: “If the SRF balances are above zero, then we know the Fed is cashing the checks of the politicians using printed money.”
Hayes labels this dynamic “Stealth QE.” He argues the optics of outright balance-sheet enlargement via asset purchases are now politically poisonous—“QE is a dirty word… QE = money printing = inflation”—so the central bank will want to meet marginal greenback demand via SRF lending somewhat than by visibly creating extra reserves.
What This Means For The Crypto Market
The result’s functionally comparable from a liquidity standpoint, in his view: repo credit distributed by the Fed against Treasuries still will increase spendable {dollars} in the system to finance authorities borrowing. “This will buy some time, but eventually the exponential expansion of treasury debt issuance will force the repeated use of the SRF,” he writes. “Stealth QE will begin shortly. I don’t know when it will begin. But… the SRF balance must grow as the lender of last resort. As SRF balances grow, the amount of fiat dollars in the world expands as well. This phenomenon will reignite the Bitcoin bull market.”
He also sketches a near-term tactical backdrop that helps clarify latest market tone across crypto. While auctions are pulling money into the Treasury General Account, he notes, fiscal spending has been quickly impeded by the federal government shutdown, producing a internet drain in private-sector liquidity.
“The Treasury General Account is above the $850 billion target by ~$150bn,” he writes, arguing that this “extra liquidity won’t get released into the markets until the government reopens,” contributing to “current softness in the crypto markets.” In other phrases, the same fiscal engine that in the end forces the Fed’s hand via the SRF can, in the very short run, sap liquidity when issuance front-runs outlays.
Hayes’ rhetoric stays deliberately sharp. He describes Treasuries as “dog shit” at prevailing real yields, calls the buy-side “debt shit eaters,” and opens with a hymn to Bitcoin’s financial properties—“Praise be to Lord Satoshi that time and compounding interest exist regardless of who you are.” The provocation serves the purpose: if the marginal financing of US deficits more and more depends on opaque backstops somewhat than clear reserve creation, then crypto’s native, non-sovereign liquidity cycles will key off the same hidden plumbing. He distills the investment upshot in a single sentence: “Treasury Debt Amount Issued = Increase in Supply of Dollars.”
The essay shouldn’t be a calendar call. Hayes refuses to timestamp the inflection—“I don’t know when it will begin”—and he warns that “between now and when stealth QE begins, one has to husband capital. Expect a choppy market,” particularly with shutdown dynamics distorting flows.
But he’s unequivocal on direction once SRF usage turns into persistent: “Stealth QE will begin shortly… [and] will reignite the Bitcoin bull market.” For crypto traders conditioned to watch CPI prints and FOMC dots, the message is to monitor money-market microstructure instead. In Hayes’ framework, when SRF balances stop being a rounding error and start trending, that is the inform that greenback liquidity has quietly flipped—and that crypto isn’t topping yet.
At press time, the full crypto market cap was at $3.41 trillion.
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