Arthur Hayes is tying Bitcoin’s next move to stress in Japan’s currency and government bond markets. The BitMEX co-founder argues that a weakening Japanese yen and a selloff in long-dated Japanese Government Bonds (JGBs) could trigger US action that adds dollar liquidity.
In his latest essay, “Woomph,” Hayes said the yen slide and falling JGB prices signal deeper fragility. He argues that any intervention that expands the US Federal Reserve’s balance sheet could lift risk assets, including Bitcoin (BTC).
Hayes said the yen’s weakness alongside rising JGB yields reflects structural pressure in Japan. He described the market move as a systemic warning that can spread beyond Japan.
However, he argued that the risk matters most through global funding channels. He said stress in Japan could influence US Treasury yields if Japanese capital shifts back home.
Meanwhile, Hayes pointed to Japan’s position as a net energy importer. He argued that a weaker currency raises import costs and adds inflation pressure, complicating policy choices.
In addition, he said the Bank of Japan (BOJ) faces challenges as the largest holder of JGBs. He argued that falling bond prices imply large unrealized losses, which can weigh on confidence.
Hayes outlined a step-by-step intervention pathway centered on the New York Fed. He said the Fed could create new bank reserves, sell dollars for yen in the foreign exchange (FX) market, and then use that yen to buy JGBs.
Consequently, he argued the operation could support USD/JPY and lower long-end JGB yields. He also said it would shift foreign-exchange and interest-rate risk onto the Fed’s balance sheet.
Still, Hayes noted that traders should look for proof in official data, rather than headlines. He pointed to “Foreign Currency Denominated Assets” on the Fed’s weekly H.4.1 balance sheet release as the key line item to watch. He argued that a rapid rise there would suggest the Fed has started accumulating foreign-currency assets consistent with his proposed pathway.
The Financial Times reported that a US “rate check” helped drive a sharp yen move and fueled speculation about coordinated action. Hayes said traders often view that kind of market language as a precursor to intervention.
Hayes framed the policy motive as self-interest, not charity. He said Japan-based investors, often called “Japan Inc.,” hold about $2.4 trillion in foreign debt, mostly US Treasuries. He argued that higher JGB yields could pull that capital home, forcing Treasury sales that lift US borrowing costs.
Meanwhile, he linked that risk to America’s fiscal position. He said higher Treasury yields could worsen the burden created by record peacetime deficits. He also argued that a stronger dollar can hurt US export competitiveness by making American goods pricier abroad.
Additionally, Hayes said the BOJ held its policy rate at 0.75% on January 23. He framed the decision as increasing the odds that Japan seeks US help to stabilize the yen and the JGB market.
For Hayes, the crypto takeaway is straightforward: liquidity matters. He argued that balance-sheet expansion can provide short-term support for risk assets, and he said Bitcoin remains sensitive to shifts in global dollar liquidity.
However, he also flagged a near-term complication. Hayes wrote that a rapidly strengthening yen has historically aligned with risk-off positioning as leveraged yen-funded trades unwind. He said that the dynamic can weigh on Bitcoin before any liquidity impulse arrives.
Hayes said he will remain patient until the balance-sheet evidence appears. He wrote that he exited leveraged Bitcoin proxies, including Strategy (MSTR) and Japan-listed Metaplanet, ahead of the yen move and would consider re-entering if the H.4.1 foreign-asset line item rises sharply.
At press time, the material said Bitcoin traded at $89,137. The Wall Street Journal reported that Hayes expects Bitcoin could jump if Fed intervention confirms fresh liquidity.