Rising Dollar Liquidity Will Drive Bitcoin and Cryptocurrency Up

Arthur Hayes posted on the X platform, stating that his article "Yen-quake" will introduce how Buffalo Bill Bessent plans to manipulate the USD/JPY exchange rate and restart the currency printing press. Hayes claims that the continuous weakening of the yen over the past decade has driven up global asset markets, but this situation will eventually come to an end. The yen is the lowest valued currency globally and is a focal point of controversy among the major powers of the United States and China, as well as ordinary Japanese voters.

There are three ways to address the yen issue, but U.S. Treasury officials and Japanese politicians only lean towards one of them. He will explain the operational mechanisms of each method for yen appreciation and why the last option is the preferred solution; he will also discuss how to politically implement the third option. He stated that as dollar liquidity rises significantly, Bitcoin and cryptocurrencies will increase in value.

The three options include: 1. The Bank of Japan significantly raises interest rates, eliminating the interest rate differential between the dollar and yen at least on the short end. 2. The government persuades domestic institutions and public entities like GPIF to change their investment mandates, selling overseas assets and buying local assets. 3. Preferred option: The Japanese Ministry of Finance exchanges its holdings of U.S. Treasuries through repurchase transactions with the Federal Reserve in exchange for dollars; then sells dollars in the foreign exchange market to buy yen.

Arthur Hayes stated that before delving into details, speculators should consider why yen appreciation is being discussed now. For decades, many have claimed that the yen was about to appreciate, leading to the unwinding of global carry trades. Two weeks ago, monetary policy officials from the U.S. and Japan implemented a joint currency manipulation action, which they delicately referred to as intervention. U.S. Treasury Secretary Buffalo Bill Bessent expressed a desire to raise the counterparty limit for the FIMA repurchase mechanism so that the Japanese Ministry of Finance could utilize its vast asset reserves to defend the yen. The Japanese Ministry of Finance also stated that it is closely cooperating with the U.S. to push for a decline in the USD/JPY exchange rate. Relevant officials are conveying to the market that support for changes in global currency relations must be taken seriously by the market.