Arthur Hayes: If the Federal Reserve expands its balance sheet to stabilize the yen and Japanese government bonds, it will benefit risk assets such as Bitcoin.

In a recent article, BitMEX co-founder Arthur Hayes analyzed that the recent continuous depreciation of the yen and the decline in Japanese government bond prices are causing "unusual noises" in global financial markets. He believes that the Federal Reserve and the US Treasury may be forced to join forces to directly intervene in the yen exchange rate and the Japanese government bond market by expanding their balance sheets, thereby injecting new liquidity into the global fiat currency system. Hayes speculated that potential pathways might include: the New York Fed creating dollar reserves, instructing primary dealers such as JPMorgan Chase to sell dollars and buy yen in the foreign exchange market to support the exchange rate, and allocating some funds to Japanese government bonds to suppress yields. This move would increase the size of "foreign currency-denominated assets" on the Fed's balance sheet, essentially equivalent to absorbing the risks of the yen exchange rate and Japanese government bond interest rates through "money printing." He pointed out that the core objective of such operations is to stabilize the yen, curb the rise in Japanese government bond yields, prevent Japanese funds from massively selling US Treasury bonds and flowing back to Japan, thereby avoiding an uncontrolled rise in US Treasury yields and, to some extent, enhancing the competitiveness of US exports. At the same time, global dollar liquidity will increase accordingly, and the exchange rates of currencies such as the euro and the renminbi may also passively strengthen. Arthur Hayes emphasized that this "disguised quantitative easing"—not traditional QE—may ultimately be a medium- to long-term positive for risk assets, including Bitcoin. Regarding trading, he stated that a rapid strengthening of the yen is usually a signal of pressure on risk assets; therefore, he will not rashly increase his risk exposure before confirming that the Federal Reserve has officially intervened in the yen and Japanese government bond markets through quantitative easing. He revealed that he has temporarily closed positions in highly leveraged Bitcoin-related assets such as Strategy and Metaplanet; if his assessment is verified, he will re-enter the market. While awaiting policy clarity, his fund, Maelstrom, continues to increase its holdings of Zcash, while maintaining its positions in other high-quality DeFi tokens; once the Federal Reserve confirms quantitative easing intervention, he will consider increasing his holdings in DeFi assets such as ENA, ETHFI, Pendle, and LDO.