Former BitMEX CEO Arthur Hayes has published a detailed theory predicting a significant rally for Bitcoin and other cryptocurrencies, contingent on potential covert monetary intervention by the U.S. Federal Reserve to support the Japanese yen and bond markets.
In an essay titled “Woomph” published on January 28, 2026, Hayes argues that the Fed possesses the legal authority to expand its balance sheet by creating new dollar reserves to purchase Japanese yen. These yen would then be used to buy Japanese Government Bonds (JGBs). The stated goal of such an operation would be to strengthen the weakening yen and suppress JGB yields, thereby preventing Japanese investors from conducting a mass sell-off of U.S. Treasury holdings to repatriate funds—a move that could spike U.S. borrowing costs.
Hayes directly links this potential liquidity injection to crypto asset prices, stating, “Bitcoin and quality shitcoins will mechanically levitate in fiat terms as the quantity of paper money rises.” He believes this action would increase global dollar liquidity, weaken the U.S. Dollar Index (DXY), and fuel asset price inflation, with cryptocurrencies being a primary beneficiary.
As potential evidence for his theory, Hayes points to a “rate check” conducted by the New York Federal Reserve on USD/JPY exchange rates on January 23. Analysts from QCP Capital noted this action indicated official sensitivity to yen weakness. Hayes interprets such moves as the Fed “deliberately and publicly telegraphing its intentions.” The legal mechanism, according to Hayes, would involve the U.S. Treasury’s Exchange Stabilization Fund and the Fed’s authority to hold foreign currency assets.
However, Hayes acknowledges his framework is currently a theory, writing, “What I will present is a theory which the actual flow of money… doesn’t support yet.” He states his personal trading decisions are contingent on observing actual expansion in the “Foreign Currency Denominated Assets” line on the Fed’s weekly balance sheet reports.
The prediction comes amid a cautious market environment. At the time of writing, Bitcoin was struggling to hold above $90,000, trading around $89,000. Other market observers, like Michaël van de Poppe, have also highlighted the importance of Japanese monetary policy, suggesting that Bank of Japan intervention could allow risk-on assets to continue their upward trajectory.
