Arthur Hayes: The U.S. Treasury Department will inject up to $1.4 trillion in market liquidity in May to promote the return of the Bitcoin bull market

This site (120BtC.coM): BitMEX co-founder Arthur Hayes predicted in early April that U.S. dollar liquidity would improve starting in May. One of the reasons was the U.S. fiscal The Treasury Department may start using funds in its account to spend money in May, thereby increasing market liquidity, when he expects the Treasury Account Balance (TGA) to reach $1 trillion.

According to data from the U.S. Treasury Department’s information website, when Hayes issued his forecast on April 9, the size of TGA funds was US$729 billion. Now the latest data has grown to US$955.7 billion. Indeed, as he expected, the size of TGA funds is nearly 1 trillion dollars.

Arthur Hayes: It is expected that the crypto bull market will accelerate its return

Just today (26th), Hayes once again published his forward-looking predictions on the market on X. First, he said that the Treasury Department did indeed add approximately US$200 billion in tax revenue to the TGA as expected. Then he pointed out that compared with the Federal Reserve interest rate meeting in May, the focus should be on possible fiscal policies.

Regarding the second quarter refinancing announcement that will be announced next week, what strategy will U.S. Treasury Secretary Yellen adopt? She pointed out that there are three options:

• By The TGA's funding dropped to zero to stop issuance of Treasury bonds, which is equivalent to an injection of approximately $1 trillion in liquidity.

• Moving more borrowing into short-term Treasury bills (T-bills), thereby taking funds out of reverse repurchase agreements (RRP), equivalent to an injection of $400 billion in liquidity .

• Combining the above two points, no long-term bonds are issued, only short-term treasury bills are issued, and the funds of TGA and RRP are reduced, which is equivalent to injecting liquidity of US$1.4 trillion.

Hayes said that from the above three options, it can be observed that the market will significantly increase liquidity. As he judged at the beginning of this month, US dollar liquidity will improve starting in May.

He emphasized that in this case, the Fed's influence has become irrelevant, and Yellen's role will become crucial. If any of these three options happens, expect stocks to rebound and, most importantly, the crypto bull market may accelerate back into gear.

The golden opportunity to invest in cryptocurrency has arrived

Regarding the optimistic view of the market, Hayes mentioned it in his latest article on the 24th. At that time, he believed that now is a good time to increase investment in cryptocurrency. The timing is mainly based on the following three reasons:

• Depreciation of legal currency: Currently, major economies in the world (the United States, China, the European Union and Japan) are implementing policies to devalue their currencies in order to alleviate the Pressure on government balance sheets. In this case, traditional financial institutions can take advantage of the upcoming Bitcoin spot ETFs in the United States and the United Kingdom and Hong Kong to profit from the devaluation of legal currencies and protect the purchasing power of wealth.

• Government printing money: If the government can promote economic growth (real GDP growth) by increasing the budget deficit, politicians will have an incentive to increase spending at an interest rate lower than the real GDP growth rate. To raise debt, Hayes expects that central banks will continue to print money and buy government bonds to artificially lower government bond yields, which will cause the public's savings to be invested in low-yielding government debt.

• U.S. election to protect the economy: 2024 is a critical year for presidential elections in many major countries, especially the United States, which has far-reaching global influence. Hayes believes that in order to ensure re-election, the Democratic Party will stimulate economic growth. Based on past trends, if the economy goes into recession during an election year, an incumbent president's chances of re-election decrease significantly. To avoid a recession, the ruling party may artificially boost GDP by increasing government spending and borrowing.

Putting these factors together, Hayes suggested that adding to cryptocurrencies in the coming months may be a golden opportunity, as the above situation may lead to further gains in the crypto market.

The above is the detailed content of Arthur Hayes: The U.S. Treasury Department will inject up to $1.4 trillion in market liquidity in May to promote the return of the Bitcoin bull market. For more information, please follow other related articles on the PHP Chinese website!