BitMEX co-founder Arthur Hayes believes one catalyst could reignite bullish momentum for the cryptocurrency market.
Hayes tells his 502,700 followers on social media platform X said more liquidity could soon flood the markets, boosting risky assets like crypto.
He is referring to the expected May 1 quarterly announcement on the refinancing (QRA) from US Secretary of the Treasury Janet Yellen. Hayes details some possible tax decisions Yellen could make that he believes would accelerate the crypto market again.
“As expected, tax revenues added approximately $200 billion to the U.S. Treasury General Account (TGA). Forget the May Fed meeting in Q2 2024. The refund announcement comes out next week. What games will Yellen play, here are some options:
1. Stop issuing government bonds by reducing the TGA to zero, which means a $1 trillion liquidity injection.
2. Shift more borrowing into government bonds, removing money from the RRP (reverse repurchase agreement), meaning a $400 billion liquidity injection.
3. Combination of 1 and 2, not issuing long-term bonds, only bills, and phasing out the TGA and RRP at the same time, that’s a $1.4 trillion liquidity injection.
Hayes then says that the Fed is irrelevant and that investors can expect a stock and crypto rally if any of the three scenarios occur.
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Generated image: Midjourney