Trump's Policy Shifts Seen as a Catalyst for USD Liquidity and Bitcoin Recovery

Arthur Hayes, a prominent voice in the crypto space, has predicted a sharp rebound in Bitcoin in 2026, driven by a revival in USD liquidity. He attributes this to anticipated actions by President Donald Trump, who is expected to push for aggressive credit expansion to supercharge the economy. According to Hayes, this expansion will stem from Fed balance sheet growth, strategic bank lending, and lower mortgage rates.

The U.S. credit market is already reacting to these expectations. Trump has proposed a 10% cap on credit card interest rates for one year, which could reduce consumer debt burdens but also pose risks to lenders. Analysts estimate this move could eliminate $250 billion in subprime credit card revenue.

The Trump administration has also launched a legal investigation into the Federal Reserve, which Fed Chair Jerome Powell has described as politically motivated. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, has defended the Fed's independence, emphasizing its role in maintaining economic stability.

Why Did This Happen?

Arthur Hayes argues that Bitcoin's performance in 2025 was limited by declining USD liquidity, unlike gold and the Nasdaq, which benefited from stronger non-liquidity factors. He expects Bitcoin to outperform in 2026 as liquidity improves. This view aligns with broader market expectations of Fed intervention and strategic lending by banks.

Trump's actions reflect a broader strategy to lower borrowing costs and stimulate economic activity. By targeting interest rates on credit cards and proposing a $200 billion purchase of mortgage bonds, the administration is aiming to reduce credit card debt and housing costs.

How Did Markets React?

The financial sector has expressed concern over these developments. Bank executives warned that the 10% credit card interest cap could reduce credit availability, especially for lower-income consumers, and potentially increase borrowing costs for others.