Crypto Isn’t Topping Yet: Arthur Hayes Says Stealth QE Is Near
Arthur Hayes argues that the following leg of the crypto cycle shall be pushed not by a headline pivot to quantitative easing, however by a “stealth” model executed via the Federal Reserve’s Standing Repo Facility (SRF). In a brand new essay titled “Hallelujah” revealed 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: “Government issued debt grows the cash provide.”
Hayes’ logic chain begins with an commentary 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 long run to get re-elected within the current.” For the United States, he contends that the trajectory is already set: “Here are the estimates from the TBTF banksters, and some US authorities businesses. As you possibly can 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 Amount,” the following vital query is who really buys that debt, and on what financing.
Fed’s Stealth QE Will “Pump Crypto”
He dismisses overseas central banks as reliable marginal consumers after the US sanctioned and immobilized Russian reserves in 2022. “If Pax Americana is keen to steal Russia’s cash… then no overseas proprietor of treasuries is ever protected,” he writes, concluding reserve managers “would slightly purchase gold than treasuries.” He likewise downplays the capability of the US family sector on condition that “the 2024 private financial savings fee 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 towards issuance of “$1,992 billion,” making them significant however not decisive.
Instead, Hayes positions relative-value hedge funds—significantly these reserving positions by way of Cayman automobiles—because the marginal, price-setting bid for US length. Citing a current Federal Reserve research, he quotes: “Cayman Islands hedge funds bought, on internet, $1.2 trillion of Treasury securities… [between] January 2022 and December 2024… [and] absorbed 37% of internet issuance of notes and bonds.” The commerce structure is easy: “Buy a money treasury debt safety vs. promote the corresponding treasury futures contract,” then lever the tiny foundation via repo funding. Because the sting is “measured in foundation factors,” the commerce solely works if leverage is reasonable and predictable day by day.
That funnel leads on to the SRF. Hayes lays out the Fed’s short-rate hall—“Upper and Lower Fed Funds; at present 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.
Lower Fed Funds = RRP < IORB < SRF = Upper Fed Funds,” he summarizes, including that the goal, SOFR, usually oscillates contained in the band. Stress happens “when SOFR trades above the Upper Fed Funds,” which he calls “an issue” as a result of “the filthy fiat monetary system shuts down” as soon as contributors can’t roll in a single day leverage at a secure fee.
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 fee is so engaging,” making them much less obtainable as repo money suppliers. That leaves banks, who will provide liquidity as long as they’ve ample reserves, however “banks misplaced trillions in reserves since the Fed began QT.”
Set towards 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 forestall a funding accident. “Because an identical 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 gives an appropriate 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 are actually politically poisonous—“QE is a unclean phrase… QE = cash printing = inflation”—so the central financial institution will favor to fulfill marginal greenback demand by way of SRF lending slightly than by visibly creating extra reserves.
What This Means For The Crypto Market
The result’s functionally related from a liquidity standpoint, in his view: repo credit score distributed by the Fed towards Treasuries nonetheless will increase spendable {dollars} within the system to finance authorities borrowing. “This will purchase a while, however ultimately the exponential enlargement of treasury debt issuance will power the repeated use of the SRF,” he writes. “Stealth QE will start shortly. I don’t know when it should start. But… the SRF stability should develop because the lender of final resort. As SRF balances develop, the quantity of fiat {dollars} on the earth expands as nicely. This phenomenon will reignite the Bitcoin bull market.”
He additionally sketches a near-term tactical backdrop that helps clarify current market tone throughout crypto. While auctions are pulling money into the Treasury General Account, he notes, fiscal spending has been briefly impeded by the federal government shutdown, producing a internet drain in private-sector liquidity.
“The Treasury General Account is above the $850 billion goal by ~$150bn,” he writes, arguing that this “further liquidity received’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—“Praise be to Lord Satoshi that point and compounding curiosity exist no matter who you might be.” The provocation serves the purpose: if the marginal financing of US deficits more and more depends on opaque backstops slightly 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 Amount Issued = Increase in Supply of Dollars.”
The essay just isn’t a calendar name. Hayes refuses to timestamp the inflection—“I don’t know when it should start”—and he warns that “between now and when stealth QE begins, one has to husband capital. Expect a uneven market,” particularly with shutdown dynamics distorting flows.
But 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 traders conditioned to look at 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 full crypto market cap was at $3.41 trillion.