Bitcoin as a Barometer of Dollar Liquidity
Arthur Hayes argues that Bitcoin remains the purest indicator of USD liquidity. When liquidity dries up, markets cool down — and since April, dollar liquidity has been steadily declining.
Yet BTC continued rising due to two temporary forces: institutional ETF arbitrage flows and aggressive corporate buying from firms like Strategy.
Institutional Arbitrage Was Never “Real Demand”
According to Hayes, institutions weren’t long-term believers.
They simply bought spot ETFs, shorted CME futures, captured the spread, and left once the arbitrage collapsed.
This mass exit triggered outflows and fear among retail investors, accelerating the correction.
Strategy-Style DAT Companies Slowing Down
Dollar Access Trade (DAT) companies, including Strategy, have also reduced their purchasing activity.
Both major liquidity streams — ETF arbitrage and DAT flows — shut off simultaneously, exposing the market to true macro conditions.
All Eyes on Trump and Bessent
Hayes believes the next macro catalyst depends on Donald Trump and Scott Bessent.
They have two options:
• unleash massive liquidity and inflate a new real-estate bubble, or
• prove that their aggressive rhetoric was empty.
With elections in 2026, Hayes expects them to choose stimulus.
Before QE Returns, Markets Must Be “Pushed Down”
Hayes predicts a 10–20 percent drop in equities and a rise in 10-year Treasury yields toward 5 percent.
That, he says, will be the moment when authorities “panic and hit the QE button” to stabilize markets.
Bitcoin Could Dip to $80–85k Before Exploding Higher
Hayes warns that BTC may fall to the $80k–85k range during this liquidity vacuum.
But once the Federal Reserve reactivates liquidity measures, he anticipates a spectacular rally toward $200–250k by year’s end.
Zcash: The “Last Shield” in the AI Era
Hayes singles out one asset above all others: Zcash.
In a world dominated by AI surveillance and disappearing privacy, he describes ZEC as the “last shield” — a vital privacy tool and a major emerging metanarrative.
