Editor| Wu Says Blockchain

BitMEX co-founder Arthur Hayes stated in a video interview on the Altcoin Daily podcast that the pressure from US debt, bond repurchases, and potential yield curve control will continue to release liquidity, driving up Bitcoin while being optimistic about the relatively lagging ETH. Notably, BitMEX, which he co-founded in 2014, has announced it will officially shut down on September 23, 2026, ending 11 years of operation; the operator stated the decision was based on business and industry strategy evaluation, with the platform seeking a sale for over a year.

The audio transcription was done by GPT and may contain errors; please watch the original video on YT.

Under $40 trillion in debt, traditional finance is experiencing a crisis of trust in US bonds

Host: As someone who has stepped out of the traditional financial system, what do you think these traditional financial institutions are thinking now? If Crypto has become an important market theme by 2026, what do you think the traditional financial players are really thinking when they look at the crypto market today?

Arthur Hayes: I think everyone in the TradFi circle is talking about a new term — — “sustainability.” The US has about $40 trillion worth of debt, with rising interest payments, along with problems in many other large sovereign bond markets. People are starting to worry: “Are these bonds I hold going to be worth anything in five years? Will inflation spike again? Are the assets I currently hold even right?”

And today, after the US Treasury initiated bond repurchase operations, this worry has obviously been exacerbated. The US Treasury increased the authorized repurchase size of long-term bonds at least twofold. All these situations are reinforcing a fear in the market: “My God, I’m holding so many government bonds, but their performance is lagging far behind almost all other assets. Why should I still hold these things?”

Moreover, the US government has repeatedly proven one thing: When you really need to massively sell these bonds, you may not be able to sell them smoothly, right? If any country wants to sell US Treasury bonds on a large scale, various problems will immediately arise: “Wait a minute, let’s first handle it through the FIMA Repo Facility (Foreign and International Monetary Authorities Repo Facility)”; “We’ll think of other methods”; “Are you an ally important enough to us?” and so on.

So, for a country, you originally regarded these assets as part of national savings — — perhaps accumulated from long-term trade surpluses. You chose to hold US Treasury bonds instead of oil, gold, fertilizers, or other physical assets. But when you really need to monetize these assets for your domestic economy or any other purpose, the specific reasons become unimportant; the US side may tell you: “No, you can’t just sell it directly. We would like another method to help you exit this position — — of course, provided you are our friend.”

Why does US bond repurchase drive Bitcoin up?

Host: So, how do traditional financial institutions view Crypto? If they are so worried about debt and bond issues, does that mean Crypto has not even entered their line of sight?

Arthur Hayes: No. I think Crypto is just one of the “pressure valves”; it is essentially one of the pressure valves from the previous large-scale money printing by central banks. So, as the market becomes increasingly worried that the US will implement yield curve control in some milder yet clearer way, Bitcoin and other Crypto asset prices will become that pressure valve. After the announcement last night, you’ve already seen this mechanism starting to take effect.

Although the scale itself isn’t particularly exaggerated, possibly just increasing from $20 billion to $40 billion or so, the exact figure isn’t the focus. The more important signal is that the market sees the US 10-year Treasury yield rise to about 4.75%, and it could quickly jump to 5%. This obviously scares them, and within weeks, they suddenly rolled out operations similar to “Operation Twist” and doubled the size.

Meanwhile, the Federal Reserve — — I have a friend working over in Washington — — they are not raising interest rates now, even though they theoretically should based on current data. Given the inflation data, economic growth, and the fact that the 2-year Treasury yield is about 50 to 60 basis points above the effective federal funds rate, the Fed should theoretically raise rates; there’s nothing to discuss.

But they won’t. Why? Because the US Treasury needs to issue a large amount of short-term Treasury bills and use these tools to conduct various operations in the market. The fundamental reason is that fewer and fewer people are willing to hold this debt long-term.

Host: So, the Fed should be raising rates, but because the US debt burden is too heavy, it can’t realistically do so. And just on the day we recorded this episode, the US Treasury announced it was doubling the size of bond repurchases. For those who just entered the Bitcoin market in the past year or two and are still struggling to understand the macroeconomy, simply put, what do these bond repurchases really mean?

Arthur Hayes: It means more liquidity. It means more fiat currency units chasing a limited number of goods and assets, with Bitcoin being one of them. Simply put, “the digits will go up.” This is the road to 2008, and 2008 ultimately gave birth to Bitcoin. So, this is exactly why you should hold Bitcoin now.

The truly important point is when everyone starts realizing: “These government-issued bonds, these US Treasury bonds, might not be worth what I thought they were. With these, I can’t buy real scarce things, and even this market itself has been heavily intervened upon. I need a true value store asset.” What you need is an asset that can truly respond positively when more and more dollars chase scarce assets.

That is Bitcoin. This is the logic behind Bitcoin’s birth in 2009, and this logic has not changed since then. Of course, it will experience fluctuations due to liquidity cycles. But if you’re looking for a very critical moment, a moment when the whole world begins to realize “the emperor has no clothes,” then this is such a point.

When the market truly begins to worry that the largest and most liquid sovereign debt market in the world may soon enter yield curve control, I believe Bitcoin’s price will quickly rise to hundreds of thousands of dollars.

Why did the 2008 financial crisis give birth to Bitcoin?

Host: You were in the market during the 2008 global financial crisis. What did you mainly observe at that time? Did they intervene in the market through bond repurchases one or two years before the crisis hit? How similar were the situations then compared to now? Were they doing similar things before the actual collapse?

Arthur Hayes: Of course. After the crisis truly erupted, the first thing they did was deal with Bear Stearns. Strictly speaking, they didn’t directly bail out Bear Stearns, but allowed JPMorgan, led by Jamie Dimon, to acquire Bear Stearns at a very low price while providing massive loan support. This was indeed a very advantageous deal for JPMorgan.

This was probably the first very obvious signal. Later, they initially thought they believed in the “free market,” which is why they let Lehman Brothers fail.

It turned out later that they found out they actually didn’t like the free market that much. Next, you saw the CEOs of major banks all getting on trains to Washington. Do these people usually take trains to Washington themselves? Of course not. But that time, they were going to get public funds.

So they went to Washington, sought help from the government, and ultimately received around $700 billion in bailout funds. At this point, the average person would naturally ask: “Why?” Why can bankers at Goldman Sachs still receive bonuses while my house is being foreclosed by the bank for non-payment of loans?

They also didn’t fulfill their obligations, right? Why did Goldman Sachs get bailed out? Why did AIG get bailed out? Why were all these institutions saved while I lost my home? This is the backdrop against which Bitcoin was born.

Of course, I do not know Satoshi Nakamoto, so no one can definitively determine what he was thinking. But if you look at the public sentiment at that time, the content of the Bitcoin white paper, and the timing of its release, I believe one direct impetus for Bitcoin's birth is that the massive bailouts post-2008 financial crisis represented a forsaking of the responsibility to maintain a sound monetary system.

Host: So, what other tools do they have to release liquidity? What might happen next in 2026, 2027, or even further down the line?

Arthur Hayes: I think one very important signal released by Bassett is the FIMA Repo Facility. You can understand it this way: many foreign governments hold a large amount of US assets. Currently, the most notable is Japan, not necessarily because Japan is under the greatest pressure, but because it is the case we are most concerned about now.

Japan holds about $1 trillion in US Treasuries. Now Japan needs to strengthen its own currency, and it needs to bring capital back home for remilitarization, to provide support to citizens affected by inflation, and for other domestic spending. Additionally, Japan has signaled that it’s preparing to adjust policies to encourage corporate sectors, private sectors, and government-related institutions to sell overseas assets.

What does this mean? It means selling US stocks and US bonds, converting the returned dollars into yen, and bringing funds back to Japan to build a better Japan. The EU, Germany, and many other regions actually have similar situations. They need to increase spending, whether for military purposes or various social projects. Meanwhile, a large portion of the assets they currently hold is concentrated in the US financial market.

Therefore, they will ultimately need to sell some US assets. But the US cannot withstand the largest buyer suddenly becoming the largest seller, as that would destroy the market. One significant reason why US financial assets have performed so well over the past two or three decades is that these countries have been continuously buying US assets.

If this money flow reverses, then both the US Treasury market and the stock market will face substantial downside risks. And the US absolutely cannot allow that to happen. This is also why they’ve started to propose another plan: increasing the counterparty limits for the FIMA Repo Facility, and even ultimately removing limits altogether.

In other words, if you want to sell US Treasuries, the US will tell you: “Don’t sell directly in the market yet; come to the Fed.” The Fed can create dollars directly, give you dollars, take over the US Treasuries you hold, and then keep rolling that financing continuously. Once you get the dollars, you can go into the forex market and sell your dollars to buy back your own currency.

And now, the US government wants the dollar to weaken, and many other countries also want the dollar to weaken. Through this method, the dollar can be depreciated without the immediate impact on the US financial market of large-scale sell-offs by foreign investors of US assets. Therefore, the real “pressure valve” is the Fed's balance sheet.

I think this actually signals something more important than US Treasury bond repurchases. Of course, they cannot do this right away because it requires internal consensus within the Fed, including Federal Reserve Bank of New York President John Williams, Fed Board member Christopher Waller, and Vice Chair Philip Jefferson, all need to agree.

But ultimately they will reach some behind-the-scenes agreement to make this happen. I even think that perhaps in a few weeks they will announce something similar at the Global Central Bank Annual Meeting in Jackson Hole, Wyoming. But in any case, the Bassett has already indicated to us the future direction: it involves the Fed virtually creating unlimited amounts of currency to absorb the US Treasuries and other US assets that foreign governments may sell.

This will expand the Fed's balance sheet. I believe this is the real big story. As for the current bond repurchases, I feel they are more indicative of where the pain points for the US government are — — probably when the yield on 10-year US Treasuries hits about 5%. If yields appear poised to break through that level, they will continue down the current path until they ultimately enter a clear yield curve control.

What technical indicators does Arthur Hayes monitor for Bitcoin?

Host: For current traders, if they only look at Bitcoin, what do you think are the most noteworthy technical analysis (TA) signals right now? When you look at Bitcoin from a technical analysis perspective, what do you usually monitor?

Arthur Hayes: To be honest, I don’t really look at technical analysis. I pay attention to someone named Milton Berg, who mainly does technical analysis on the stock market. And now Bitcoin largely follows the stock market, particularly the trends in the US stock market.

So, if the logic of the US stock market begins to collapse, as the assets everyone holds are actually highly similar, once someone receives a margin call, they will sell off whatever assets they can, right? At that point, what will you sell? Of course, you will sell those assets that are liquid and can be sold off.

So, I will observe when Milton Berg buys and sells to judge the overall market environment. But you asked me if I have a technical analysis trading system specifically for Bitcoin? No.

Of course, I think $60,000 is a very important level, and $100,000 is definitely a crucial threshold as well, while the previous historical high of about $125,000 to $126,000 is also an important position. But between these key price levels, I won’t dive into very detailed technical charts to trade short-term. That’s not my style.

Host: For assets that have already achieved product-market fit, isn’t the 200-week moving average one of the most noteworthy technical indicators?

Arthur Hayes: Maybe, I don’t know. I can’t really say, because I’ve never looked at that indicator. I don't trade based on technical indicators. I’m more inclined to look at the overall atmosphere, macro stories, and market sentiments. Because ultimately, each of us must tell ourselves a story that explains why we buy and why we sell.

Of course, it’s best if the liquidity logic aligns with that market narrative or the market sentiment that is forming. And you shouldn’t wait until market sentiment is so strong that everyone believes it before investing. What you really want to do is to enter when that sentiment just starts to emerge from underwater, but hasn’t become consensus yet.

Meanwhile, I also hope to find an asset that is currently not popular in the market. This is why I currently really like Ethereum. I believe that in this liquidity-driven Crypto bull market, Ethereum will outperform all other major crypto assets.

Why is there optimism for ETH

Host: In my view, if I had to choose another altcoin right now, almost all signals point to Ethereum. It at least still has a complete cycle of opportunity, and there may even be ten years or more of development space. For instance, Robinhood is pushing asset tokenization, and their chain is also built on the Ethereum ecosystem; Ethereum holds the most stablecoins; and in terms of market narrative, asset tokenization has clearly become a very pronounced trend.

So, the impression I get now is that buying Ethereum is almost a choice where “no one will lose their job because of it.”

Arthur Hayes: Yes, I think the narrative around Robinhood and Arbitrum is indeed very good. Of course, the actual gas fees flowing into the Ethereum base layer are minimal, but that’s not the point; the focus is on the narrative. Furthermore, Ethereum has yet to break through the historical high of about $5,000 set in 2021, while nearly all other large-cap crypto assets have already surpassed their previous historical highs during this round of cycles.

So, Ethereum is currently lagging, and that’s precisely why I like it. Additionally, it is also unlikely to suddenly go to zero. At least I don't think I will wake up one morning and see ETH plummet by 75% due to some incident. Of course, such a thing could theoretically occur. But Ethereum has been operating since 2015. In contrast, some other blockchains may have only existed for a year or two or three, thus the risk of such extreme situations happening is much greater.

Because of this “Lindy effect,” and given that Ethereum has existed long enough, if I were to take a long position on ETH in our portfolio, I would feel much more comfortable allocating a larger nominal position than I would on other crypto assets with the same level of exposure.

Host: If someone asks me why to choose Ethereum, there are so many highlights for other chains, such as Solana being faster and cheaper, etc. But Ethereum has the largest network. According to Metcalfe’s Law, a larger network will grant it higher value.

So, ultimately, what is more important? The network itself, or the usability advantages like being faster and cheaper? After all, Silicon Valley is always chasing “the next big thing.”

Arthur Hayes: I think ultimately, the most important question is: Who has the largest developer community? The answer is Ethereum. I don’t really care about those flashy features. Can you tell me any DeFi primitive that was created on any network outside of Ethereum first? Not one.

So, where is the real creativity concentrated? It's in Ethereum. Where is the real talent of developers concentrated? Also in Ethereum. Of course, others will take those ideas and make them look prettier and sexier on Solana or other platforms, and indeed some have made a lot of money from it. But that was last year, or the year before.

Now I want to ask: “What have you done for me lately?” What has Solana recently created that is genuinely new? Nothing, really. Similarly, Ethereum hasn’t delivered me anything particularly stunning in the past four or five years, and precisely because it has been neglected by the market for so long, I think it has a very strong potential to become an asset that outruns the market in the next phase.

Host: Suppose that within the next five years Bitcoin rises to $200,000, perhaps even earlier. Let’s not discuss exactly when. What price do you think Ethereum will be at then?

Arthur Hayes: I don’t even know what the current ETH/BTC ratio is. It could correspond to $20,000 or $25,000?

Host: Because if we look at historical ratios — — I know this is using past performance to judge the future — — Ethereum is often seen as a high beta asset to Bitcoin. If Bitcoin rises to a certain level, then historically, Ethereum usually appreciates with even more elasticity; that’s the logic.

Arthur Hayes: Basically, that’s right. Look at Bitcoin Dominance, which is the proportion of Bitcoin market cap to the entire crypto market. It’s currently around 60%. And during the DeFi Summer from 2020 to 2021, it once dropped to about 25% to 26%.

I wonder if it will drop that low again? Maybe not. But I think a drop to around 40% is absolutely possible. And if Bitcoin Dominance really drops to around 40% from its current level, the main driving force will likely be Ethereum. Because ETH is the largest asset apart from Bitcoin. No other asset can achieve such immense appreciation in a sufficiently short time, thereby genuinely reducing Bitcoin Dominance significantly.

Does Bitcoin need the CLARITY Act to rise?

Host: By that calculation, Ethereum would rise to above $20,000. Arthur, you are someone who looks more at “market feel” and have been trading in the financial markets for decades. How important do you think the CLARITY Act aimed at Crypto really is?

Arthur Hayes: Not that important. Who cares? I am the founder of a Crypto project focused on the US market and need to raise funds from US venture firms, so I completely understand why you would like the CLARITY Act.

You surely want a regulatory framework that can build some “moat” for yourself. For example, you might hire more lawyers to meet regulatory requirements, thus blocking some competitors or restricting customers from doing certain things. I completely understand this logic.

But that’s not the investment approach I like in Crypto. If I were to play this game, I’d rather just buy stocks. So if this is your way of playing, that’s fine. But I believe the CLARITY Act is actually a very bad thing for the US Crypto industry, for genuine innovation, and for those developers who truly create useful products and find product-market fit.

Bitcoin has evolved from its birth in 2009 to today without ever needing the CLARITY Act. What it truly needs is for Bassett to urgently raise the bond repurchase scale to salvage the US Treasury market; or to help Japan convert its US Treasuries into cash by creating liquidity through the Federal Reserve.

These are the true driving forces behind Bitcoin. Bitcoin does not need any CLARITY Act to rise. And how long has the market been discussing the CLARITY Act? Almost two years. But what just truly prompted the market to witness its biggest rally in recent years? It was because the market finally realized that the US debt issue had genuinely become problematic, and yield curve control was looming.

Host: But without a doubt this would benefit Ethereum, right? Stablecoins would develop more around Ethereum, and the GENIUS Act might also play a role in promotion. The US government and the market are clearly boosting AI vigorously. Their fingers are on the button, hoping for funds to flow into AI. Similarly, they also wish for funds to flow into stablecoins, because that would increase demand for US Treasuries.

Arthur Hayes: But you can think of it from another angle. Did the US Department of Defense or the US Treasury buy a stake in Circle? No. But they are now buying stakes in rare earth mining companies, buying Intel, IBM, and various other companies. So, where is the government bailout for crypto enterprises? I haven’t seen it.

Of course, they will discuss various acts, this act and that act, talking about many things. But as you just mentioned, they are genuinely investing wholeheartedly in AI. They will demand banks to cooperate and modify regulatory rules so that banks can hold more related assets on their balance sheets; they might even use funds from already passed acts to directly buy equity in companies.

This is entirely state capitalism, not capitalism. What about Crypto? Where is Circle's government bailout? Where is Coinbase's government investment? So, they will say a lot of nice things. But when it comes time to spend money, what crypto enterprises did they actually invest in? I haven’t seen it. I think, at least they've said some nice things.

Host: If Donald Trump is watching this episode right now, what would you like to say to him about the CLARITY Act?

Arthur Hayes: Veto.

Host: Forever veto?

Arthur Hayes: Not forever, just veto it this time.

Host: Regardless, the US Securities and Exchange Commission and the Commodity Futures Trading Commission participated in a White House summit this week and are continuing to push relevant work. What do you think? Now the SEC and CFTC are both acting very supportively towards Crypto.

Arthur Hayes: That’s good. It’s a good thing for US companies, and I support it. Great. I have no negative comments about that.

Host: If Bitcoin were to suddenly drop to $35,000 tomorrow, what would be the most likely cause? What would happen next in the market?

Arthur Hayes: It could be due to Michael Saylor getting liquidated and having to sell all his Bitcoin at once.

Host: If that were the case, would it lead us into a prolonged bear market lasting two years or even eight years? Or would it, on the contrary, bring us closer to the bottom? Perhaps that could be a capitulation-style sell-off that brings the market closer to a real bottom.

Arthur Hayes: That’s the “capitulation drop” candle everyone is waiting for. That would be the real buying opportunity, akin to March 2020. And don’t forget, there’s still a lot of money in the market. So even if some short-term price misalignments happen, you should buy that dip.

Host: If Bitcoin suddenly rises to $120,000 tomorrow, what would be the most likely cause? Then how would the market proceed?

Arthur Hayes: The Fed might lift the limits on the counterparties for the FIMA repo facility, and then Bitcoin would quickly rise to $500,000. Once it breaks through its historical high, the market will begin to chase it again. This could turn into a momentum trade.

Host: What you mentioned were two extreme scenarios. Looking at it realistically, what do you think Bitcoin will reach by the end of this year?

Arthur Hayes: $126,000, surpassing the previous historical high.

Host: What would truly keep you awake at night? You seem like someone unfazed and also a long-term investor. But if you had to pinpoint something, considering your main positions are in Crypto, what truly worries you?

Arthur Hayes: War. Because ultimately, if the power grid goes down, Crypto is over. At that point, what do you have left? Can electronic dollars help you? Can fiat still be used? Where is your physical gold? Where is your gun? What worries me is the potential collapse of social order.

Of course, it doesn’t have to be war. For instance, a serious cyberattack that leads to widespread internet shutdown, or the closure of the water supply system, etc. If it really gets to that extent, we’d be entering a “Mad Max” world.

Host: Do you think such situations would first impact those more vulnerable and easier-to-attack protocols?

Arthur Hayes: As for those weaker protocols, this is actually like asking: in that kind of situation, what could still serve as currency? You must engage in a “coordination game” with others where everyone collectively decides which item can allow you to purchase others' time and labor. We can certainly discuss various theories all day long, but one thing I am sure of — — it certainly won’t be SUI.

Host: For those just starting to engage in “vibe trading” today, they see Arthur Hayes and think: “I like this person’s growth path, and I also want to learn trading like him.” What advice would you give to these newcomers to the trading market?

Arthur Hayes: Patience and dedication. The purpose of the market is to take your money, not to help you make money. So, you must have patience, really commit, and read a lot of books.

Host: Is there a particular book you really like?

Arthur Hayes: "Reminiscences of a Stock Operator" which tells the story of Jesse Livermore, a very famous speculative trader during the Great Depression.

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