TLDR
- BitMEX co-founder Arthur Hayes announced the start of a Bitcoin bull market, tying it to expanded U.S. Treasury bond repurchase operations
- Treasury increased maximum long-dated bond buyback limits from $2 billion to a minimum of $4 billion per operation, effective September 9
- Bitcoin surged from under $65,000 to over $80,000 in the wake of the Treasury’s August 19 policy update
- Spot Bitcoin ETFs in the United States saw $517 million in net inflows on August 19, marking the strongest single day since early May
- Hayes revealed Maelstrom adopted maximum risk positioning across Bitcoin, Ether, Ethena, and Ether.fi investments
Arthur Hayes, co-founder of cryptocurrency exchange BitMEX, announced that a fresh Bitcoin bull market cycle has commenced, attributing the shift to the U.S. Treasury’s decision to expand its bond repurchase program, which he believes will inject new dollar liquidity into markets.
In an essay titled “Same Same But Different” released on August 25, Hayes outlined his thesis connecting Bitcoin’s latest price surge to Treasury Secretary Scott Bessent’s strategy of increasing purchases of longer-maturity government bonds.
Bond Buyback Program Expansion Details
On August 19, the U.S. Treasury Department announced it would expand the maximum capacity for specific long-dated bond buybacks, raising the ceiling from $2 billion to a minimum of $4 billion for each operation during the period from September 9 through November 4.
According to Treasury officials, the program aims to enhance liquidity for older securities while managing the department’s cash reserves. The government has not characterized this initiative as a form of monetary stimulus.
Hayes offers an alternative interpretation. His analysis suggests that purchasing older, longer-maturity bonds drives their prices higher while suppressing yields. In his framework, declining yields increase the relative attractiveness of risk assets such as Bitcoin.
He drew parallels to former Treasury Secretary Janet Yellen’s strategy of increasing Treasury bill issuance in late 2023, which Hayes believes redirected money-market funds into tradable securities.
Bitcoin Breaks Through $80,000 Barrier
Bitcoin rallied from levels below $65,000 prior to the Treasury announcement to surpass $80,000 by August 25. The digital asset reached an intraday peak above $81,000, marking its most significant weekly gain in several months.
Multiple catalysts fueled the upward momentum. U.S. spot Bitcoin exchange-traded funds attracted approximately $517 million in net inflows on August 19. Cascading liquidations in derivatives markets accelerated the breakthrough above $71,000. A softer U.S. dollar index also supported the rally.
The 10-year Treasury yield declined toward 4.65% immediately after the announcement, while the 30-year yield approached 5.20%. Both benchmarks subsequently regained a portion of those losses.
At the time Hayes released his analysis, no buyback operations under the expanded limits had been executed. The updated schedule begins September 9.
Treasury Cash Reserves and Maelstrom’s Strategy
Hayes also highlighted the Treasury General Account, which maintained approximately $940 billion in reserves. Bessent suggested portions of this cash stockpile could fund buyback operations without altering planned debt issuance schedules. No comprehensive plan to utilize the entire balance has been publicly disclosed.
Hayes disclosed that his investment fund Maelstrom shifted to maximum risk allocation, establishing positions across Bitcoin, Ether, Ethena, and Ether.fi. Specific position sizes were not revealed.
He emphasized that significant price corrections can still occur within bull market environments.
The Federal Reserve Bank of New York is conducting separate reserve-management purchases totaling approximately $10 billion this month. Fed officials clarify these operations aim to maintain adequate banking system reserves and operate independently from Treasury’s buyback initiative.
The next critical date is September 9, when expanded buyback limits become operational. The Treasury will review purchase volumes during its quarterly refunding assessment scheduled for November 4.
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