In a new essay published on March 31, former BitMEX CEO Arthur Hayes lays out a case for a $250,000 Bitcoin price target by year-end, grounded in his belief that the US Federal Reserve has effectively capitulated to fiscal dominance and resumed de facto quantitative easing (QE) for US Treasury markets.<\/p>\n
The essay<\/a>, laced with vivid satire and underpinned by rigorous macroeconomic analysis, argues that the Fed\u2019s recent shift in policy signals a structural return to fiat liquidity expansion\u2014an environment historically beneficial to Bitcoin and other hard assets. \u201cPowell proved last week that fiscal dominance is alive and well,\u201d Hayes wrote. \u201cTherefore, I am confident QT, at least regarding treasuries, will stop in the short to medium term\u2026 Bitcoin will scream higher once this is formally announced.\u201d<\/p>\n Hayes centers his argument on the Federal Reserve\u2019s March FOMC meeting, during which Chair Jerome Powell suggested that balance sheet reduction\u2014or Quantitative Tightening (QT)<\/a>\u2014would slow considerably. Powell stated: \u201cWe strongly want the MBS [mortgage-backed securities] to roll off our balance sheet at some point. We would look closely at letting the MBS roll off but keep the overall balance sheet size constant.\u201d<\/p>\n This policy configuration, dubbed \u201cQT Twist\u201d by Hayes, implies that the Fed will reinvest MBS runoff proceeds into US Treasuries, thereby supporting bond prices while holding the nominal balance sheet steady. Hayes characterizes this as \u201ctreasury QE,\u201d even if not labeled as such.<\/p>\n \u201cIf the Fed balance sheet is kept constant, then they can buy: Max $35 billion per month of treasuries or annualized $420 billion,\u201d Hayes calculated. In addition, the tapering of Treasury QT from $25 billion to $5 billion per month represents an annualized $240 billion positive shift in dollar liquidity.<\/p>\n To frame the Fed\u2019s political constraints, Hayes invoked a satirical dialogue in which Powell is subjected to humiliation by Treasury Secretary Scott Bessent<\/a>\u2014a fictionalized dramatization that underscores the subordination of monetary policy to fiscal necessity. In this theatrical allegory, Powell is told by Bessent: \u201cNext week at the FOMC, you are going to start tapering QT for my treasury bonds and announce that QE for treasury bonds<\/a> will start in the near future. Do you understand?\u201d<\/p>\n Hayes reinforces his point by drawing historical parallels to Arthur Burns, Fed Chair during the inflationary 1970s, who admitted in his 1979 speech \u201cThe Anguish of Central Banking\u201d that political pressure rendered the Fed powerless to stop inflation.<\/p>\n Burns wrote: \u201cThe Federal Reserve was itself caught up in the philosophic and political currents that were transforming American life and culture\u2026 Monetary policy came to be governed by the principle of under-nourishing the inflationary process while still accommodating a good part of the pressures in the marketplace.\u201d<\/p>\n Hayes sees the same dynamic today, intensified by the government\u2019s ballooning debt burden and the need to finance deficits at low yields.<\/p>\n Trump\u2019s Policy Agenda<\/p>\n Hayes ties the Fed\u2019s pivot to the political realities of a second Trump administration, particularly its industrial policy goals. Trump has pledged to reduce the US fiscal deficit from 7% to 3% of GDP by 2028, while reshoring manufacturing, sustaining military spending, and avoiding cuts to entitlements.<\/p>\n However, Hayes argues that these objectives are mathematically incompatible without central bank support, given the scale of debt issuance required. \u201cThe maths don\u2019t add up unless Bessent can find a buyer of treasuries at an uneconomically high price or low yield. Only US commercial banks and the Fed have the firepower to buy the debt at a level the government can afford.\u201d<\/p>\n To unlock that capacity, Hayes anticipates the Fed will not only halt QT but also exempt banks from the Supplementary Leverage Ratio (SLR)\u2014a key regulatory constraint limiting bank purchases of U.S. Treasuries.<\/p>\n Bessent himself hinted at such a move on the All-In Podcast, stating: \u201cIf we take [SLR] away\u2026 we might actually pull treasury bill yields down by 30 to 70 basis points. Every basis point is a billion dollars a year.\u201d<\/p>\n Hayes maintains that Bitcoin is uniquely positioned to benefit from this shift in monetary regime. Unlike equities, which are entangled in the legal and political architecture of the state, Bitcoin is a bearer instrument native to the digital realm, with no counterparty risk.<\/p>\nQE Returns, Fiat Dies, Bitcoin Flies<\/h2>\n