BitMEX Co-Founder Advocates Bitcoin Over Bonds Amid Treasury Policy Shifts

Arthur Hayes, the co-founder of BitMEX, has recently advised investors to steer clear of government bonds and instead focus on Bitcoin and banking stocks. Hayes argues that the support for stablecoins by Treasury Secretary Bessent presents significant liquidity opportunities through traditional banking channels rather than cryptocurrency companies like Circle.

Hayes disagrees with financial advisors who recommend government bonds based on forecasts of falling yields and central bank rate cuts. While he acknowledges that central banks globally will likely cut rates and print money to prevent government bond market collapses, he argues that the potential returns from bonds are modest compared to other investment opportunities. He expects bonds to generate returns of 5% to 10% even if his predictions about monetary policy prove correct. However, he warns that investors will miss substantial gains from alternative assets during the same period. He predicts that the Bitcoin price could potentially reach $1 million, representing 10x returns, and the Nasdaq 100 possibly spiking 5x to 100,000 by 2028.

Hayes criticizes investors who are waiting for Federal Reserve Chairman Powell to announce unlimited quantitative easing and rate cuts before selling bonds and buying cryptocurrency. He argues that this approach will not materialize unless the United States enters military conflicts with other major powers. He also highlights the potential collapse of systemically important financial institutions. Hayes points to historical precedent where investors suffered opportunity costs waiting for traditional monetary policy responses while alternative liquidity mechanisms drove asset prices higher. He contends that Treasury Secretary Bessent’s approach through stablecoin regulation and banking policy changes offers more immediate and substantial market impact.

Hayes identifies Treasury Secretary Bessent’s stablecoin enthusiasm as a strategic solution to government financing challenges rather than genuine support for cryptocurrency innovation. The Treasury faces funding approximately $2 trillion in yearly federal deficits plus $3.1 trillion in maturing debt during 2025, requiring creative financing mechanisms beyond traditional bond sales. The Genius Stablecoin Act creates a regulatory framework that benefits large banks while restricting competition from technology companies. The legislation prohibits paying interest to stablecoin holders, preventing fintech companies from competing effectively against established financial institutions.

Hayes argues that stablecoin adoption by major banks unlocks up to $6.8 trillion in treasury bill purchasing power through converting regular deposits into blockchain-based stablecoins. Banks gain operational advantages, including reduced compliance costs estimated at $20 billion annually across major institutions, while maintaining higher profit margins through treasury bill investments. JPMorgan’s planned JPMD stablecoin launch on Coinbase’s Base network exemplifies this strategy, offering customers improved functionality while allowing banks to eliminate expensive operational departments. The stablecoin framework provides banks with government-guaranteed deposit bases that smaller fintech competitors cannot match, ensuring market dominance for established financial institutions.

Hayes recommends investing in major banking stocks rather than cryptocurrency companies like Circle. He emphasized that large banks will capture the majority of stablecoin market benefits through regulatory advantages. The eight largest banks could see stock prices increase by an average of 184% based on cost savings and profit margins from stablecoin operations. The analyst calculates potential value creation of $3.91 trillion for major banks through combining $20 billion in annual compliance cost savings with enhanced profit margins from treasury bill investments. The current market capitalization of these eight banks is approximately $2.1 trillion, which shows extremely high potential for upside from stablecoin adoption.

Hayes points out that Circle has traded 472% better than Bitcoin since its initial public listing, though he doubts whether this premium will be sustainable based on regulatory restraints. Other policy changes would unlock $3.3 trillion of bank reserves deposited at the Federal Reserve if legislators reduce interest paid on reserve balances. Senator Ted Cruz proposed eliminating the payments to reduce government deficits while forcing banks to invest reserves in treasury securities.