Key Takeaways
- BitMEX co-founder Arthur Hayes has announced the beginning of a Bitcoin bull cycle, attributing it to expanded U.S. Treasury bond buyback operations
- Starting September 9, the Treasury increased maximum buyback caps for long-dated bonds from $2 billion to a minimum of $4 billion per transaction
- Following the Treasury’s August 19 announcement, Bitcoin surged from under $65,000 to exceed $80,000
- On August 19, U.S. spot Bitcoin ETFs saw $517 million in net inflows, marking their best performance since early May
- Hayes disclosed that his investment fund Maelstrom has shifted to full risk-on positioning, holding Bitcoin, Ether, Ethena, and Ether.fi
Arthur Hayes, the co-founder of BitMEX, has proclaimed the start of a fresh Bitcoin bull cycle, attributing the shift to the U.S. Treasury’s decision to expand its bond buyback operations, which he believes will inject additional dollar liquidity into markets.
In an August 25 essay entitled Same Same But Different, Hayes laid out his thesis connecting Bitcoin’s latest price surge to Treasury Secretary Scott Bessent’s decision to scale up purchases of long-maturity government bonds.
Bond Buyback Caps Doubled for Long-Dated Securities
On August 19, the U.S. Treasury announced it would increase the upper limit for specific long-end buyback operations by at least 100%. The ceiling will rise from $2 billion to a minimum of $4 billion per transaction, effective from September 9 through November 4.
According to the Treasury Department, the initiative aims to enhance market liquidity for seasoned securities and optimize cash management. Treasury officials have not characterized the program as a form of monetary easing.
Hayes interprets the move through a different lens. In his analysis, purchasing aged, long-duration bonds elevates their market prices while compressing yields. Declining yields, he contends, enhance the relative appeal of risk-oriented assets such as Bitcoin.
He drew parallels to Janet Yellen’s strategy during her tenure as Treasury Secretary, when increased Treasury bill issuance in late 2023 redirected capital from money markets into tradable securities, according to Hayes.
Bitcoin Breaks Through $80,000 Barrier
Bitcoin rallied from sub-$65,000 levels prior to the announcement to over $80,000 by August 25. The digital asset touched an intraday peak above $81,000, marking its most robust weekly gain in recent months.
Multiple catalysts contributed to the price movement. U.S. spot Bitcoin exchange-traded funds captured approximately $517 million in net inflows on August 19. Forced liquidations in derivatives markets provided additional momentum above the $71,000 threshold. A softer U.S. dollar index also supported the rally.
The benchmark 10-year Treasury yield declined toward 4.65% after the announcement, while the 30-year yield approached 5.20%. Both subsequently retraced portions of those moves.
At the time Hayes published his analysis, no transactions had occurred under the expanded limits. The revised schedule commences on September 9.
TGA Balance and Maximum Risk Positioning at Maelstrom
Hayes also highlighted the Treasury General Account, which currently maintains approximately $940 billion. Secretary Bessent has suggested that portions of this reserve could fund buyback operations without modifying planned debt issuance schedules. The Treasury has not announced a comprehensive plan to utilize the entire balance.
Hayes revealed that Maelstrom has adopted a maximum risk posture, with allocations to Bitcoin, Ether, Ethena, and Ether.fi. Specific position sizes were not disclosed.
He emphasized that significant price pullbacks can still occur within bull market cycles.
The Federal Reserve Bank of New York is simultaneously executing approximately $10 billion in reserve-management transactions this month. The Fed clarifies these operations aim to sustain banking system reserves and operate independently from the Treasury’s buyback initiative.
The next critical date is September 9, when the increased buyback thresholds become operational. The Treasury will evaluate purchase volumes again during its quarterly refunding process on November 4.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
