Arthur Hayes, founder of BitMEX, on Wednesday proposed a theory that the Federal Reserve might print money to support a failing Japanese bond market and strengthen the yen, potentially affecting U.S. markets (Ed. note: Hayes posted his thesis publicly).
He outlined the idea in a post he proposed that links dollar creation to yen and JGB market operations.
Japan faces a dual problem: the yen is weakening while Japanese government bond yields rise, signaling waning market confidence.
That shift could prompt Japanese investors to sell U.S. Treasuries and repurchase higher-yielding JGBs.
Hayes says the Fed could create dollar reserves with banks such as JPMorgan, sell those dollars for yen, then use the yen to buy JGBs.
He adds this would expand the Fed’s balance sheet under foreign currency assets and act as intervention.
Hayes tied this possible intervention to Bitcoin’s price action, saying money printing would help Bitcoin escape its sideways trading.
He also said, “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,” and he watches the Fed’s weekly H.4.1 report.
The U.S. dollar index fell to about 95.6 on Tuesday, a four-year low according to data shows.
Donald Trump called the dollar “doing great” in a recent speech, saying, “I mean, the value of the dollar, look at the business we’re doing. No, the dollar is doing great.” (Statements reported according to coverage.)
