Arthur Hayes, chief investment officer of Maelstrom, argued in a new essay that traders should ignore Federal Reserve Chair Kevin Warsh’s hawkish rhetoric and instead track the euro-yen exchange rate as a leading signal for fresh dollar liquidity. Hayes forecast that EUR/JPY, near 185 at the time of writing, will slide to 140 or lower by next June, driven by Treasury Secretary Scott Bessent’s efforts to weaken the euro and strengthen Asian allies’ currencies without forcing outright dollar sales.
He said the mechanism runs through the Fed’s FIMA repo facility and the Treasury’s Exchange Stabilization Fund, but the largest risk sits with French lenders. BNP Paribas, Credit Agricole, and Societe Generale account for roughly a fifth of US repo lending, and widening French government bond spreads plus capital outflows could force them to retreat. If that happens, Hayes expects the New York Fed to expand its RPM program, which already buys 39% of T-bill issuance and has added about $22 billion per month to the balance sheet since December. That pace could climb toward $100 billion if the Treasury steps up long-end bond purchases, injecting more dollar liquidity into global markets.
Hayes directly dismissed Warsh, writing, “I don’t pay attention to anything Warsh says.” His comments follow the Fed chair’s Jackson Hole speech about a week earlier, which knocked Bitcoin down by roughly $3,000 in hours and pushed the asset below $77,000. Rate-hike odds for September jumped from about one-third to roughly 60% afterward, and Bitcoin has since been choppy, briefly falling under $76,500 after renewed US-Iran strikes before recovering toward $78,000 with a 30-day gain near 22%.
Maelstrom keeps Bitcoin as its core long-term holding. Hayes also set year-end 2026 targets of $10,000 for ETH, $0.50 for ENA, and $2 for ETHFI, arguing that Fed balance sheet expansion would be a significant bullish catalyst for crypto and other risk assets.
