Bitcoin to hit $200K due to U.S. Treasury buybacks

Arthur Hayes, co-founder of Bitmex, believes that future redemptions of American bonds could inject significant liquidity on the markets and send Bitcoin to $ 110,000, or even up to $ 200,000.

In an April 23 articleHayes underlined the treasure plan to issue a new debt to buy older and less liquid obligations, commonly known as treasury bills. These obligations are not negotiated so frequently, so buying them could help smooth the bond market while offering arbitration opportunities for institutional investors.

Hayes stresses that the secretary of the Treasury Scott Bessent will probably be based more on the issue of bonds and the buyouts to maintain market stability, taking into account the expansion of American deficits and the drop in tax revenue. According to Hayes, this mechanism will operate similarly to quantitative relaxation, which is a strategy Used by central banks to stimulate the money supply and stimulate the economy.

However, in this case, the liquidity conditions are essentially attenuated by the American Treasury rather than by the Federal Reserve. He maintains that by lowering the yields On older obligations, this buyout strategy will encourage investors to seek higher yields in risky assets, such as cryptocurrencies.

At the same time, when the bond markets become less volatile, investors will feel more safe to borrow money to make larger bets. This additional purchase power can cause larger price oscillations in more risky assets such as Bitcoin (BTC), increase prices faster when the markets increase.

Hayes underlines that this scheme is similar to what occurred at the end of 2022 when a strong Bitcoin rally was powered by increasing liquidity of the market. He thinks that most investors are too focused on the moment when the Fed cut Interest rate, overlooking the fact that the central bank has already slowed its quantitative tightening, which means that it reduces the conditions behind the scenes.

If the liquidity continues to flow, Bitcoin could reach $ 110,000, then go up to $ 200,000, predicted Hayes. And once BTC breaks this level, altcoins can see an even greater increase while investors run as higher risks.