Crypto: Fed Move To Backstop Japan Bonds Could Boost Bitcoin: Arthur Hayes

BitMEX founder Arthur Hayes says the yen is weakening while Japanese government bond yields are rising, which could lead to Japanese investors selling US Treasuries.

Bitcoin could break out of its “sideways funk” if the United States central bank attempts to support a failing Japanese bond market by printing money, according to BitMEX founder Arthur Hayes.

Hayes proposed a theory on Wednesday about how the Federal Reserve “could be printing money to manipulate the yen and JGB [Japanese government bond] markets.”

Japan faces a dual crisis: the yen is weakening while Japanese government bond yields are rising simultaneously, signaling a potential loss of market confidence. This also impacts the US because Japanese investors might sell US Treasurys to buy higher-yielding JGBs instead.

“Will a meltdown of the yen and JGB markets cause some sort of money printing by the BOJ [Bank of Japan] or the Fed? The answer is yes,” said Hayes.

Hayes believes the Fed will intervene by creating dollar reserves with banks like JPMorgan, selling dollars for yen — which strengthens the yen — then using yen to purchase JGBs, lowering Japanese bond yields.

This expands the Fed’s balance sheet under “Foreign Currency Denominated Assets,” he explained.

Related: Bitcoin ‘groove’ to return despite gold, Nasdaq spotlight: Arthur Hayes

Hayes appears to be putting his money behind his theory and waiting for some movement from the central bank’s money printers, keeping an eye on the Fed’s balance sheet viewed through its weekly H.4.1 report.

“Bitcoin fell as the yen strengthened against the dollar. I will not increase risk before I confirm the Fed is printing money to intervene in the yen and JGB markets,” he said.

Source: CoinTelegraph