In the modern essay published on March 31, the former general director of Bitmex, Arthur Hayes, presents the case for a price of USD 250,000 USD target by the end of the year, justified that the US Federal Reserve has effectively capitulated to fiscal domination and resumed de facto quantitative alleviation (QE).

. essayCombined with live satire and delayed by strict macroeconomic analysis, argues that the last change of FED policy signals the structural return to the expansion of Fiat liquidity – the environment historically beneficial for bitcoins and other tough assets. “Powell proved last week that the fiscal domination is alive and doing well,” Hayes wrote. “That’s why I am sure that QT, at least in relation to the treasures, will stop in a short and medium period … Bitcoin will shout higher when it is formally announced.”

Qe is back, Fiat dies, Bitcoin flies

Hayes focuses his argument on the Fomc Federal Fomc march, during which the chairman Jerome Powell suggested that reducing the balance – or quantitative exacerbation (QT) – will sluggish down. Powell said: “We want MBS strongly [mortgage-backed securities] At some point, lose our balance. We would look carefully to allow MBS to slow down, but we maintain a constant overall balance size. “

This configuration of the rules, named by Hayes “QT Twist”, suggests that the FED will again invest MBS rafting to transfer American Treasuries, thus supporting bond prices, while maintaining a nominal balance. Hayes describes this as “tax qe”, even if it is not marked as such.

“If the Fed balance is maintained at a constant level, they can buy: a maximum of $ 35 billion a month treasurers or $ 420 billion a year,” Hayes calculated. In addition, the narrowing of the QT treasure from $ 25 billion to $ 5 billion per month is an annual positive change in the smoothness of the dollar by $ 240 billion.

To frame the political limitations of the Fed, Hayes recalled a satirical dialogue in which Powell is humiliated by the secretary of the treasury Scott Bessent – fictitious dramatization, which emphasizes the subordination of monetary policy to the necessity of fiscal. In this theatrical allegory, Powell says Bessent: “Next week in FOMC you will start narrowing QT for my tax bonds and announce that QE will start for treasury bonds in the near future. Do you understand?”

Hayes strengthens his point, attracting the historical similarities to Arthur Burns, fed by the chairman during the inflationary of the 1970s, who in his speech of 1979 “Central Banking torment”, that political pressure made the Fed a powerless Fed to stop inflation.

Burns wrote: “The federal reserve itself was absorbed in philosophical and political currents, which transformed American life and culture … Monetary policy was subject to the principle of insufficient nutrition of the inflationary process, while taking into account a large part of pressure on the market.”

Hayes today sees the same dynamics, intensified by government debt burden and the need to finance deficits at low profits.

Trump’s policy agenda

Hayes is associated with the trading of the Fed with the political reality of the second Trump administration, in particular its goals of industrial policy. Trump undertook to reduce the American fiscal deficit from 7% to 3% GDP by 2028, while transforming production, maintaining military expenses and avoiding cuts into permissions.

However, Hayes claims that these goals are mathematically incompatible without the support of the central bank, taking into account the required scale of debt emission. “Mathematics is not adding up until Bessent finds a treasure buyer at an uneconomically high price or low profit. Only commercial banks in the USA and Fed have firepower to buy a debt at the level to which the government can afford.”

To unlock this capacity, Hayes predicts that the FED will not only stop QT, but also release banks from an additional lever indicator (SLR) – key regulatory restrictions limiting the purchases of American treasury banks.

Bessent himself suggested such a movement on all podcasts, stating: “If we take [SLR] Far … we can actually reduce the tax account by 30 to 70 base points. Each basic point is a billion dollars a year. “

Hayes maintains that bitcoins are extremely prepared to take advantage of this change in the monetary system. Unlike actions that are involved in the legal and political architecture of the state, Bitcoin is a carrier instrument derived from the digital field, without the risk of a contractor.

“Bitcoin trades only on the basis of market expectations for the future Fiat supply,” he wrote. “If my analysis … is correct, Bitcoin reached a low level of $ 76 500 last month, and now we are starting a hill up to $ 250,000 at the end of the year.”

Referring to Gold’s reaction to QE1 in 2008–2009, Hayes emphasizes how liquidity injections can lead to delayed but explosive recording of FIAT assets. In his opinion, Bitcoin now plays the same role that Gold once did – only faster and more direct global exhibition.

Hayes also offered an insight into the approach to the implementation of Maelstrom’s capital. “We do not use any lever and buy in small clips relative to the size of our total portfolio,” he said. “We buy bitcoins and shit at all levels from 90,000 to 76,500 USD.”

During the BTC press it traded at USD 83,500.

A highlighted image from YouTube, chart from tradingview.com