Crypto Isn’t Topping Yet: Arthur Hayes Says Stealth QE Is Near

Arthur Hayes, former BitMEX CEO, in his new essay titled “Hallelujah” (published November 4, 2025), argues that the next phase of the crypto market cycle will be powered by the Federal Reserve’s “Stealth” Quantitative Easing (QE), executed via the Standing Repo Facility (SRF). He posits that persistent US fiscal deficits, increasing hedge fund demand for Treasuries, and the Fed’s attempts to manage funding stress will together result in incremental dollar liquidity. Hayes claims that this excess liquidity will ultimately drive up the price of Bitcoin and other cryptocurrencies.

Hayes explains the foundation of his argument: 'Government issued debt grows the money supply.' He highlights the political dynamics influencing US fiscal policy, claiming governments prefer borrowing to fund spending instead of relying on savings. He notes that the current trajectory reflects this trend, citing estimates of $2 trillion yearly deficits funded by equivalent Treasury borrowing. This leads to the key question Hayes poses: Who finances this massive debt issuance and under what terms?

Hayes dismisses foreign central banks as reliable buyers of US Treasuries, referencing the sanctioning of Russian reserves in 2022 as a precedent that deterred other nations. He argues that foreign reserve managers now prefer gold over US debt. Similarly, he downplays the role of the US household sector by pointing to the low personal savings rate (4.6%) relative to the 6% federal deficit as a percentage of GDP. Additionally, large US banks increased their Treasury holdings by only $300 billion against a $1,992 billion issuance, which he views as insufficient to absorb the massive supply.

Hayes points to hedge funds operating through Cayman Islands vehicles as the key marginal buyers of Treasury securities. Between January 2022 and December 2024, these funds bought $1.2 trillion of Treasuries, accounting for 37% of net issuance, according to a Federal Reserve study. He describes their financial strategy as leveraging repo markets to execute trades on Treasury securities with low-cost borrowing. This reliance on repo financing creates a critical supply-demand imbalance, making the Fed’s SRF a vital backstop for liquidity.

The SRF, Hayes explains, acts as a safety valve in the Fed’s monetary system. Stress emerges when the Secured Overnight Financing Rate (SOFR) rises above the Fed's upper target range due to insufficient repo liquidity. Hayes argues that the SRF ensures liquidity by providing unlimited cash using the Fed's 'printing press' as long as collateral, such as Treasuries, is provided. In his view, this liquidity injection constitutes a form of 'Stealth QE': politically palatable because it avoids the optics of traditional balance-sheet expansion.

Hayes predicts that Stealth QE will increase the supply of fiat dollars, indirectly boosting Bitcoin and crypto prices. He warns that in the short term, factors like the government shutdown and delays in fiscal spending have temporarily sapped liquidity, contributing to the 'current softness in the crypto markets.' However, as SRF usage grows, Hayes argues, “the Bitcoin bull market will reignite.” He stresses that crypto investors should track SRF balances as a key indicator, as they signal a buildup in dollar liquidity.