Arthur Hayes: Japan Yen Fix Could Fuel Bitcoin and Ethereum Rally

Arthur Hayes published a new essay this week arguing that the US Treasury and Japan’s Ministry of Finance have settled on a single method to strengthen the yen: running newly printed dollars through the Federal Reserve’s currency swap facility.

Hayes says the mechanics point to a wave of dollar liquidity hitting the global markets, and he’s positioning Bitcoin (BTC), gold, and Ethereum (ETH) to catch the bulk of it.

The Plan, and Why Hayes Says It’s the Only One That Works

Hayes lays out three ways Japan could push the yen higher. The Bank of Japan could raise rates aggressively, but doing so would deepen losses on its own mountain of low-yield bonds and raise Tokyo’s debt service costs.

Japan could also lean on institutions like the pension fund GPIF to sell foreign assets and buy domestic ones, but that would turn one of the largest holders of US Treasuries into a seller, something Washington can’t stomach given how dependent American markets are on that demand.

The third option, which Hayes calls the preferred one, works differently. The MOF would repo its Treasury holdings to the Fed through the FIMA facility in exchange for dollars, then sell those dollars to buy yen in the open market.

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