Arthur Hayes, the chief investment officer of crypto family office Maelstrom, said in an essay published Thursday that traders should stop paying attention to Fed Chair Kevin Warsh’s hawkish comments and instead watch the euro-yen exchange rate for early signs of fresh dollar liquidity.
He argued that mounting funding stress at French banks will eventually force the Federal Reserve to print money to keep the US repo market working, a dynamic he sees as bullish for Bitcoin and the wider crypto market.
Hayes Points to EUR/JPY as His Liquidity Gauge
Hayes said EUR/JPY, trading near 185 at the time of writing, will fall to 140 or lower by next June. He tied that forecast to Treasury Secretary Scott Bessent’s effort to weaken the euro and strengthen the currencies of US allies in Asia, meant to make American exports more competitive.
Rather than let Japan, South Korea, and Taiwan sell their dollar holdings outright, Hayes said the plan is to route that capital through the Fed’s FIMA repo facility, and he noted Bessent has already sold euros for yen through the Treasury’s Exchange Stabilization Fund.
The bigger risk, in his view, sits with French banks. He named BNP Paribas, Credit Agricole, and Societe Generale, which together handle roughly a fifth of US repo lending, and pointed to widening French government bond spreads and capital leaving French banks as signs that foreign lenders are pulling back.
If those banks retreat from repo lending, Hayes expects the New York Fed to lean harder on its RPM program, which already buys 39% of T-bill issuance, to keep the market funded.
That program has grown the balance sheet by about $22 billion a month since December, and Hayes said the pace could climb toward $100 billion if the Treasury steps up long-end bond purchases too.
He dismissed Warsh directly, writing, “I don’t pay attention to anything Warsh says.” Maelstrom’s portfolio, he added, keeps Bitcoin at its core long-term holding with year-end 2026 price targets of $10,000 for ETH and $0.50 for ENA.
A Hawkish Fed and a Choppy Bitcoin
Hayes’ essay comes about a week after Warsh’s hawkish Jackson Hole speech, which hit Bitcoin hard.
As CryptoPotato reported then, the OG cryptocurrency dropped by $3,000 within hours of that address, slipping under $77,000 after Warsh said the Fed’s 2% inflation target was “firm and fixed” and downplayed recent encouraging inflation data. Rate-hike odds for September then jumped from about a third to roughly 60% in the aftermath.
Bitcoin has stayed choppy since, with the asset turned away from $79,000 more than once before another leg down pushed it under $76,500, the lowest level in ten days, after renewed US-Iran strikes rattled markets.
However, at the time of writing, it had clawed its way back up and was trading closer to $78,000 than $77,000, pushing its gains over the last 30 days to almost 22%.
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