Arthur Hayes Analyzes Impact of US Policies on Japanese Banks and Cryptocurrency
Arthur Hayes recently analyzed how US monetary policies are affecting Japanese banks, predicting they may sell off large amounts of US Treasuries (USTs).
This could lead the Bank of Japan (BOJ) to use the Federal Reserve’s FIMA repo facility, injecting dollar liquidity that might benefit Bitcoin and other cryptocurrencies.
In his essay titled “Shikata ga nai,” Hayes describes Japanese banks’ predicament due to US policies. They engaged in dollar-yen carry trades to profit from higher UST yields amidst low domestic rates. However, aggressive US inflation responses, including rapid interest rate hikes since the pandemic, disrupted UST markets and led to major bank failures in early 2023, spurring a Bitcoin surge.
Hayes highlights the FIMA repo facility, allowing central banks to secure overnight dollar liquidity by pledging USTs. This keeps USTs off public markets and increases global dollar liquidity, potentially supporting cryptocurrencies.
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He suggests the BOJ could use the facility to purchase USTs from Japanese banks, managing USD interest rate risks without financial instability. Hayes plans to increase his cryptocurrency investments, expecting dollar liquidity from potential UST sell-offs. He advises seizing buying opportunities in Bitcoin and other cryptos amidst market dips.
Emphasizing the importance of dollar liquidity for the financial system, Hayes concludes, “This underscores another pillar of the crypto bull market. Increased dollar supply is crucial for maintaining the current dollar-centric financial system. Embrace ‘Shikata Ga Nai’ and seize buying opportunities.”
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
