Arthur Hayes: Dollar Liquidity to Drive Bitcoin Rebound in 2026
BitMEX co-founder Arthur Hayes says Bitcoin’s muted 2025 performance was largely due to a contraction in US dollar credit and Federal Reserve quantitative tightening, not intrinsic weakness in BTC. In his essay “Frowny Cloud,” Hayes argues shifts in reserve demand (including sovereign gold purchases and restrictions on Russian reserves) helped gold and the Nasdaq outperform Bitcoin despite BTC reaching a $126,000 intrayear high. Looking to 2026, he expects US dollar liquidity to expand via Fed balance-sheet growth, Reserve Management Purchases (RMP) or mortgage-backed securities purchases, and renewed bank lending — a combined effect he estimates could inject roughly $40 billion per month into markets. Hayes believes this renewed fiat liquidity would lower rates, support risk assets and create conditions for a Bitcoin rally. He highlights leveraged equity plays for BTC exposure (e.g., MicroStrategy, Marathon/Metaplanet) and says he is accumulating Zcash (ZEC) despite developer changes. Traders should monitor US dollar credit metrics, Fed balance-sheet moves, mortgage rates and key Bitcoin price levels (range noted around $87k–$95k in late 2025, resistance near $110k).
Bullish
Hayes’s thesis links macro liquidity — specifically US dollar credit and Fed balance-sheet dynamics — directly to Bitcoin price action. He argues that 2025’s range-bound BTC stemmed from tighter dollar liquidity and QT. If US dollar liquidity expands in 2026 via Fed balance-sheet growth, Reserve Management Purchases or MBS buying, and renewed bank lending (the channels Hayes highlights), this would likely lower real rates and increase risk appetite. Those conditions historically favor BTC appreciation. For traders, the news signals: (1) a macro catalyst for renewed upside in BTC if liquidity metrics turn, (2) potential outperformance of leveraged equity plays with large BTC exposure during a breakout, and (3) watch-points to time trades — Fed balance-sheet updates, dollar credit figures, mortgage rates and defined price levels (support ~87k–95k; resistance ~110k). Short-term impact: contingent/conditional — BTC could spike on confirmed liquidity expansion announcements, causing volatility and quick breakouts; nimble traders may use leveraged equity plays or futures to amplify returns. Long-term impact: persistent liquidity expansion would be structurally bullish for Bitcoin as a risk asset and store-of-value alternative. Risks remain: if liquidity fails to materialize or inflation/real-rate dynamics shift unexpectedly, the bullish case weakens. Overall, Hayes’s view implies a bullish price bias for BTC tied to observable macro indicators, not immediate certainty.