Bitcoin Could Surge 80% to $200,000 on US Treasury Buybacks, Says Arthur Hayes

Arthur Hayes, the former CEO of BitMEX, has predicted that Bitcoin (BTC) is on the verge of a significant rally, potentially surpassing $110,000 and even reaching $200,000. This prediction is based on the anticipated liquidity surge from US Treasury buybacks, which Hayes believes will drive the cryptocurrency to new all-time highs.

Hayes' analysis, presented in an April 23 article, highlights that recent market volatility, sparked by aggressive US trade policies, has created conditions similar to those that preceded previous Bitcoin rallies. He points to President Donald Trump’s tariff escalation as a key catalyst for the volatility in bond and equity markets. The MOVE Index, a measure of bond market volatility, spiked near record levels before moderating due to a policy reversal and a shift in Treasury strategy.

According to Hayes, the Treasury's new focus on buybacks could serve as a significant source of liquidity. The buyback program involves issuing new debt to repurchase older, less liquid bonds, which maintains net cash neutrality on paper. However, Hayes argues that this process frees up capital for relative value hedge funds that engage in the “basis trade,” buying cash bonds and shorting bond futures simultaneously. As Treasury purchases increase the price of off-the-run bonds, hedge funds profit and reinvest, creating a reflexive loop that supports liquidity.

Hayes contends that the availability of leverage to these hedge funds reduces bond market volatility and supports bond prices, enabling the US government to issue additional debt at affordable yields. This cumulative effect results in an increase in the dollar supply, which benefits store-of-value assets like Bitcoin, even though it is not categorized as traditional quantitative easing.

Drawing parallels to the third quarter of 2022, when then Treasury Secretary Janet Yellen used bill issuance to drain liquidity from the Reverse Repo Program (RRP), Hayes noted that Bitcoin rose nearly sixfold during the subsequent liquidity surge. He sees a similar structural setup, with Bitcoin rebounding from a low of $74,500 and poised to revisit and breach its previous peak of $110,000. If the US deficit widens and buyback operations expand, Hayes believes Bitcoin could approach $200,000. While acknowledging that such forecasts depend on sustained liquidity conditions and policy execution, he maintains that the structural setup favors Bitcoin as a hedge against fiat debasement.

Although Hayes' essay primarily focuses on Bitcoin, he also suggests that once Bitcoin decisively breaks through $110,000, a rotation into altcoins could follow. The potential “Alt Season” will consist of capital flowing into tokens with sustainable cash flows and staking rewards. However, he emphasizes that Bitcoin will remain the primary beneficiary of macro-driven liquidity injections in the near term.

Hayes concludes that, given current Treasury strategies, the probability of continued monetary expansion is high. In such a scenario, Bitcoin’s correlation with tech stocks may break down as the asset reasserts its role as a digital alternative to gold. He argues that the monetary backdrop appears firmly aligned with Bitcoin’s ascent.