Arthur Hayes argues Fed-backed yen rescue via FIMA repo facility expansion could increase dollar liquidity and drive Bitcoin, gold, and Ether higher.
Macro & Markets ·
Arthur Hayes, co-founder of BitMEX, contends that the Federal Reserve's FIMA repo facility—currently capped at $60 billion per counterparty—offers the most viable mechanism for strengthening the yen without resorting to aggressive rate hikes or large Treasury sales. Under this approach, Japan would pledge U.S. Treasuries through the facility to obtain dollars, then deploy those dollars to purchase yen in the market.
Hayes argues that raising the counterparty cap would allow the Fed's balance sheet to expand, with roughly $1.37 trillion in Treasuries held by Japan's government and GPIF potentially available as collateral for such operations. This increased scope of the facility would unlock substantially more dollar liquidity into markets.
Hayes contends that the resulting injection of dollar liquidity would benefit risk assets including Bitcoin, gold, and Ether, though the mechanism linking expanded FIMA usage to directional movement in these assets remains his assertion rather than a mechanistic certainty. The proposal hinges on whether Fed officials would approve an expanded counterparty limit and on Japan's willingness to employ the facility in this manner.