Bitcoin’s next major move may hinge less on sentiment and more on U.S. dollar flows, as shifting Federal Reserve liquidity conditions set the stage for a potential crypto rebound driven by macro forces.
Fed Balance Sheet Reversal May Push Bitcoin Price Higher, Arthur Hayes Says
Arthur Hayes outlined a macro-driven outlook for crypto markets tied to U.S. liquidity trends. The chief investment officer at Maelstrom, and co-founder and former CEO of crypto exchange Bitmex, shared his views on Jan. 14, emphasizing that a shift in Federal Reserve policy could alter bitcoin’s trajectory.
Hayes based his outlook on the relationship between bitcoin and U.S. dollar liquidity, which he described as the central driver of crypto market cycles. He explained that bitcoin’s underperformance in 2025 coincided with a prolonged contraction in liquidity caused by the Federal Reserve’s quantitative tightening and slower credit creation across the financial system. During that period, the Fed steadily reduced its balance sheet, withdrawing dollars from markets and pressuring liquidity-sensitive assets.
The Bitmex co-founder argued that this dynamic began to change late in the year as balance sheet runoff ended and new reserve management purchases were introduced. Framing that shift as a potential inflection point, he wrote:
“ Bitcoin and dollar liquidity bottomed around the same time. As dollar liquidity rapidly increases for the reasons described above, bitcoin will follow.”
He also pointed to early signs of renewed commercial bank lending, particularly toward government-supported strategic industries, as evidence that dollar creation was beginning to reaccelerate through multiple channels.
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Looking ahead, Hayes outlined how expanding liquidity could translate into market positioning. He explained that rather than increasing exposure through derivatives, he favored equity vehicles that hold large bitcoin treasuries and embed leverage through their corporate balance sheets.
Hayes specifically referenced companies such as Strategy and Metaplanet, which issue equity and debt to accumulate bitcoin, creating amplified exposure to price movements. He argued that these structures tend to lag during downturns but outperform during sustained rallies as investor demand returns. Within that framework, he concluded:
“If bitcoin can retake $110,000, investors will get the itch to go long bitcoin through these vehicles. Given the leverage embedded in the capital structure of these businesses, they will outperform bitcoin on the upside.”
FAQ ⏰
- Why does Arthur Hayes believe bitcoin could recover? He argues that rising U.S. dollar liquidity from Federal Reserve balance sheet growth historically supports bitcoin prices.
- What role does the Federal Reserve balance sheet play in bitcoin performance? Hayes says balance sheet expansion increases dollar availability, which bitcoin tends to track closely.
- How do bank loans affect dollar liquidity, according to Hayes? Renewed commercial bank lending creates new deposits, expanding the money supply.
- Why does Hayes downplay comparisons between bitcoin and gold? He believes ’s price is driven more by conditions than by relative asset performance.
Author: Kevin Helms
Source: Bitcoin
Reviewed By: Editorial Team
