Yen alarm in Japan: Arthur Hayes expects Fed money printing signal for Bitcoin
- Hayes sees Japan as a possible trigger for new liquidity if yen weakness and JGB stress force central banks to intervene.
- Things will only become bullish for Bitcoin when the Fed’s balance sheet visibly grows, especially via rising foreign currency denominated assets.
BitMEX founder Arthur Hayes sees the next Bitcoin impulse emerging in Japan, more precisely: in the yen and the JGB market. In his current one Essay “Whoomp” from January 28th, Hayes argues: A weak yen plus falling JGBs would make the situation so dire that monetary policy resistance would be difficult to avoid. Hayes’ thesis is simple: Without a new liquidity narrative, Bitcoin cannot get out of the current range between $84,000 and $94,000.
“Financial markets went ‘woomph’ as the yen weakened and JGB prices collapsed. […] Many macro commentators smarter than me declared that Japan will be the match that sets the dirty fiat system on fire. […] Will a meltdown in the Yen and JGB markets trigger some form of money printing by the BoJ or Fed? The answer is yes.”
Hayes describes the trigger as Japanese authorities having lost “control of the long end of the yield curve”: the yen was falling against the dollar while at the same time JGB yields were rising. For Hayes, this is a breach of trust: The yen is falling while yields are rising – and both are increasing Japan’s inflation and refinancing stress. Additionally, he points to potentially growing losses at the Bank of Japan as it is the largest JGB holder.
From the US perspective, the risk is that stress in Japan can spill over into government bonds. Japanese investors are among the largest holders of U.S. government bonds; Overall, he puts Japan’s foreign asset portfolio at $2.4 trillion, “with a majority in Treasuries.” Rising JGB yields could attract capital back to Japan, making Treasuries a relevant selling pressure factor.
For Hayes, the core of the trade is a US intervention: New York Fed creates dollar reserves, exchanges them for yen and parks them in JGBs. “This would allow the yen to appreciate and JGB yields to fall as the Fed adds “currency and interest rate risk” to its balance sheet. Hayes names the item “Foreign Currency Denominated Assets” as a visible balance sheet signal, which would grow in the course of such purchases.
Legally, he anchors this with the Exchange Stabilization Fund (ESF), operationally via the New York Fed. According to Hayes, the Treasury Department can intervene in the FX market but needs help from the Fed because it “cannot print money” itself.
Hayes sees a first indication in a report from last Friday: The NY Fed asked prices from several primary dealers. For him, this is a deliberate sign for the financial markets. Specifically, he mentions January 23, 2026: The BoJ left interest rates unchanged, “even though by all standards they should have increased to defend the currency and the bond market.”
What this means for Bitcoin
This is relevant for Bitcoin in that a balance sheet expansion at the US Federal Reserve ensures more liquidity in the financial markets. “Bitcoin and high-value shitcoins will mechanically float higher in fiat terms as the supply of paper money increases,” he writes. At the same time, he warns: A rapidly strengthening yen often represents “risk-off” because yen-financed trades are being wound down.
His conclusion is therefore: Only when the Fed item “Foreign Currency Denominated Assets” increases will it want to increase the risk and expand Bitcoin exposures. He mentions having already been stopped out of leveraged Bitcoin proxies such as Strategy (MSTR) and Metaplanet and will be reinstated upon confirmation. At the same time, he explains that his Maelstrom fund is continuing to increase Zcash (ZEC) and, if the Fed’s balance sheet expansion is confirmed, would also increase existing DeFi positions (ENA, ETHFI, PENDLE, LDO).
Crucial to Hayes’ scenario is the pace: a gradual appreciation of the yen could create stability, while a rapid move would lead to chaos. Whether Bitcoin gets the expected impulse depends on whether Japan goes “woomph” again and the Fed’s balance sheet visibly reacts.
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