BitMEX co-founder and prominent market analyst Arthur Hayes has identified tightening U.S. dollar liquidity and institutional dealer hedging as the primary drivers behind Bitcoin's recent sharp decline, shifting focus away from crypto-specific factors. Hayes detailed that approximately $300 billion in dollar liquidity has been drained from the financial system in recent weeks, with about $200 billion of that attributed to a rapid increase in the U.S. Treasury General Account (TGA) balance.
Hayes explained on social media platform X that this liquidity withdrawal, potentially in preparation for a possible government shutdown, reduces the cash available in banks and markets. "$BTC falling not a surprise given the fall in $ liquidity," he stated. He emphasized that dollar liquidity serves as a key reserve for crypto markets, and its contraction weakens risk appetite, with Bitcoin often being one of the first assets to react.
Furthermore, Hayes pinpointed a specific mechanical trigger for the selloff: dealer hedging related to structured products tied to the iShares Bitcoin Trust (IBIT). He suggested that financial institutions issuing these products engage in offsetting trades that can exacerbate price moves during periods of volatility. "The BTC dump is probably due to dealer hedging off the back of $IBIT structured products," Hayes wrote on February 7, 2026.
To better understand future price swings, Hayes announced he is compiling a comprehensive list of all structured notes issued by banks to identify potential trigger levels. He concluded that Bitcoin's recovery is contingent on a renewal of dollar liquidity and advised market participants to closely monitor Treasury actions and macro cash flows, warning that investment strategies must evolve as these underlying market structures change.
