Arthur Hayes is bullish on Bitcoin again, arguing that the U.S. Treasury’s ramping up of its bond buyback program could be a new source of dollar liquidity for risk assets.
In his latest essay, Same Same But Different, the BitMEX co-founder and Maelstrom CIO said Treasury Secretary Scott Bessent’s decision to increase purchases of longer-dated Treasury securities could push bond prices higher and yields lower, making financial conditions more supportive for Bitcoin.
Hayes said Bessent’s approach is similar to the debt-management strategy former Treasury Secretary Janet Yellen adopted in late 2023 because it moves money through the government bond market instead of relying directly on the Federal Reserve.
He also identified the Treasury General Account as a potential source of additional funds. With roughly $940 billion held in the account, he believes the Treasury could gradually deploy a large portion of that cash through buybacks, moving dollars from its account at the Federal Reserve into the private financial system.
The more aggressive version of his thesis would happen if the 10-year Treasury yield rises above 5%. Hayes expects policymakers could then move toward de facto yield-curve control to prevent long-term borrowing costs from rising further.
“The next bull market… just began,” Hayes said, while warning that Bitcoin would likely experience higher volatility as liquidity conditions change. He added that Maelstrom is now at “maximum risk,” with major exposure to BTC, ETH, ENA and ETHFI.
How Treasury Buybacks Fed Into Bitcoin’s Rally
Bitcoin traded below $65,000 before the Treasury announced that it would increase the maximum size of its 10- to 30-year Treasury buyback operations to at least $4 billion per operation, before climbing above $80,000 by August 25 and reaching an intraday high above $81,000.
The announcement was followed by an initial decline in long-term yields, with the 10-year moving toward 4.65% and the 30-year approaching 5.20% as traders responded to the possibility of greater Treasury demand for longer-dated securities.
Bitcoin also received support from other market flows, with U.S. spot Bitcoin ETFs recording approximately $517 million in net inflows on August 19.
The derivatives market then amplified the move as Bitcoin broke above $72,000, triggering short liquidations that added forced buying and accelerated the breakout.
According to Hayes’ thesis, the sequence of events is part of a liquidity transmission mechanism, where larger Treasury purchases lift prices for older, longer-dated bonds and push yields lower, making risk assets more attractive.
Furthermore, reducing the TGA could move more cash from the Federal Reserve into the private financial system.
What Needs to Happen for Hayes’ Theory to Play Out?
The next stage will depend on whether Treasury’s expanded buybacks translate into the liquidity conditions Hayes expects. The department recently authorized up to $38 billion of liquidity-support purchases for the quarter, alongside up to $25 billion of short-maturity cash-management buybacks, with the larger long-end limits getting implemented on September 9.
The actual purchase data will give traders their first opportunity to compare Treasury activity with movements in bond yields, the Treasury General Account and Bitcoin.
The TGA is particularly important, with the department projecting a balance of about $950 billion at the end of September and $850 billion at year-end, meaning a sustained decline would indicate that more cash is moving out of the account.
Long-term yields will provide another signal, as larger buybacks that help contain yields while Treasury continues absorbing longer-dated securities would make the liquidity mechanism Hayes describes more visible in market data.
Bitcoin’s trading environment will also matter, with ETF inflows, funding rates, open interest and liquidations showing whether the rally is attracting fresh demand or simply rebuilding leverage.
The Nov. 4 quarterly refunding will be another important checkpoint, when the Treasury is expected to reassess the size of its repurchase operations.
For Hayes’ bull-market thesis to pan out, the coming months need to show larger Treasury purchases, a declining TGA, contained long-term yields, and sustained Bitcoin demand.
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