Arthur Hayes argues that the following leg of the crypto cycle can be pushed not by a headline pivot to quantitative easing, however by a “stealth” model executed by the Federal Reserve’s Standing Repo Facility (SRF). In a brand new essay titled “Hallelujah” printed on November 4, 2025, the previous BitMEX CEO lays out a balance-sheet-driven case that persistent US fiscal deficits, hedge-fund demand for Treasuries financed by way of repo, and the Fed’s must cap funding stress will translate into incremental greenback liquidity that in the end “pumps the value of Bitcoin and different cryptos.” As he frames the core mechanism: “Authorities issued debt grows the cash provide.”
Hayes’ logic chain begins with an statement on political incentives and the arithmetic of public finance. Governments can fund spending with “financial savings or debt,” and in his view elected officers “will all the time favor borrowing from the longer term to get re-elected within the current.” For the USA, he contends that the trajectory is already set: “Listed below are the estimates from the TBTF banksters, and some US authorities companies. As you’ll be able to see, the estimates are for ~$2 trillion deficits funded by ~$2 trillion of borrowing.” In his mannequin, as soon as one accepts that “Yearly Federal Deficit = Yearly Treasury Debt Issuance Quantity,” the following essential query is who truly buys that debt, and on what financing.
Fed’s Stealth QE Will “Pump Crypto”
He dismisses international central banks as reliable marginal patrons after the US sanctioned and immobilized Russian reserves in 2022. “If Pax Americana is prepared to steal Russia’s cash… then no international proprietor of treasuries is ever secure,” he writes, concluding reserve managers “would fairly purchase gold than treasuries.” He likewise downplays the capability of the US family sector on condition that “the 2024 private financial savings price was 4.6%” whereas “the US federal deficit was 6% of GDP,” and he argues the most important US money-center banks have elevated their Treasury holdings by solely “~$300 billion” in fiscal 2025 in opposition to issuance of “$1,992 billion,” making them significant however not decisive.
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As a substitute, Hayes positions relative-value hedge funds—notably these reserving positions by way of Cayman automobiles—because the marginal, price-setting bid for US period. Citing a latest Federal Reserve research, he quotes: “Cayman Islands hedge funds bought, on web, $1.2 trillion of Treasury securities… [between] January 2022 and December 2024… [and] absorbed 37% of web issuance of notes and bonds.” The commerce structure is easy: “Purchase a money treasury debt safety vs. promote the corresponding treasury futures contract,” then lever the tiny foundation by repo funding. As a result of the sting is “measured in foundation factors,” the commerce solely works if leverage is reasonable and predictable day-after-day.
That funnel leads on to the SRF. Hayes lays out the Fed’s short-rate hall—“Higher and Decrease Fed Funds; presently these equal 4.00% and three.75% respectively”—and the coverage plumbing that retains market charges inside it: the Reverse Repo Facility (RRP) on the decrease certain for money-market funds (MMFs) and banks, curiosity on reserve balances (IORB) for banks within the center, and the SRF on the higher certain because the emergency spigot.
Decrease Fed Funds = RRP < IORB < SRF = Higher Fed Funds,” he summarizes, including that the goal, SOFR, usually oscillates contained in the band. Stress happens “when SOFR trades above the Higher Fed Funds,” which he calls “an issue” as a result of “the filthy fiat monetary system shuts down” as soon as individuals can’t roll in a single day leverage at a steady price.
In his telling, the money provide that cushions SOFR is structurally thinner than it was when the Fed started quantitative tightening in early 2022. MMFs, he says, have drained the RRP to zero as a result of “the T-bill price is so enticing,” making them much less accessible as repo money suppliers. That leaves banks, who will provide liquidity as long as they’ve ample reserves, however “banks misplaced trillions in reserves because the Fed started QT.”
Set in opposition to that diminished provide of money is relentless demand for repo financing from RV funds, whose “marginal” Treasury purchases have to be levered. If SOFR threatens to pierce the ceiling and repo turns into unreliable, the Fed’s SRF should backstop the system to stop a funding accident. “As a result of the same scenario occurred in 2019, the Fed created the SRF,” Hayes writes. “The Fed can provide an infinite amount of money utilizing its printing press at SRF so long as one supplies a suitable type of collateral.” His conclusion is blunt: “If the SRF balances are above zero, then we all know the Fed is cashing the checks of the politicians utilizing printed cash.”
Hayes labels this dynamic “Stealth QE.” He argues the optics of outright balance-sheet enlargement by way of asset purchases at the moment are politically poisonous—“QE is a grimy phrase… QE = cash printing = inflation”—so the central financial institution will favor to satisfy marginal greenback demand by way of SRF lending fairly than by visibly creating extra reserves.
What This Means For The Crypto Market
The result’s functionally comparable from a liquidity standpoint, in his view: repo credit score distributed by the Fed in opposition to Treasuries nonetheless will increase spendable {dollars} within the system to finance authorities borrowing. “It will purchase a while, however ultimately the exponential enlargement of treasury debt issuance will pressure the repeated use of the SRF,” he writes. “Stealth QE will start shortly. I don’t know when it’ll start. However… the SRF steadiness should develop because the lender of final resort. As SRF balances develop, the quantity of fiat {dollars} on the planet expands as properly. This phenomenon will reignite the Bitcoin bull market.”
He additionally sketches a near-term tactical backdrop that helps clarify latest market tone throughout crypto. Whereas auctions are pulling money into the Treasury Normal Account, he notes, fiscal spending has been quickly impeded by the federal government shutdown, producing a web drain in private-sector liquidity.
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“The Treasury Normal Account is above the $850 billion goal by ~$150bn,” he writes, arguing that this “additional liquidity gained’t get launched into the markets till the federal government reopens,” contributing to “present softness within the crypto markets.” In different phrases, the identical fiscal engine that in the end forces the Fed’s hand by way of the SRF can, within the very quick run, sap liquidity when issuance front-runs outlays.
Hayes’ rhetoric stays deliberately sharp. He describes Treasuries as “canine shit” at prevailing actual yields, calls the buy-side “debt shit eaters,” and opens with a hymn to Bitcoin’s financial properties—“Reward be to Lord Satoshi that point and compounding curiosity exist no matter who you’re.” The provocation serves the purpose: if the marginal financing of US deficits more and more depends on opaque backstops fairly than clear reserve creation, then crypto’s native, non-sovereign liquidity cycles will key off the identical hidden plumbing. He distills the funding upshot in a single sentence: “Treasury Debt Quantity Issued = Improve in Provide of {Dollars}.”
The essay is just not a calendar name. Hayes refuses to timestamp the inflection—“I don’t know when it’ll start”—and he warns that “between now and when stealth QE begins, one has to husband capital. Anticipate a uneven market,” particularly with shutdown dynamics distorting flows.
However he’s unequivocal on route as soon as SRF utilization turns into persistent: “Stealth QE will start shortly… [and] will reignite the Bitcoin bull market.” For crypto buyers conditioned to observe CPI prints and FOMC dots, the message is to trace money-market microstructure as an alternative. In Hayes’ framework, when SRF balances cease being a rounding error and begin trending, that’s the inform that greenback liquidity has quietly flipped—and that crypto isn’t topping but.
At press time, the entire crypto market cap was at $3.41 trillion.
Featured picture created with DALL.E, chart from TradingView.com
