Arthur Hayes Predicts Crypto Rally Fueled by EUR/JPY Decline and Dollar Liquidity Surge

A major decrease in the EUR/JPY exchange rate from its present value of roughly 185 to under 140 by mid-2027 would be a key indicator for an approaching increase in worldwide dollar liquidity, according to BitMEX co-founder Arthur Hayes. His main macro indication of fiat liquidity is EUR/JPY. A falling EUR/JPY indicates tension in European assets, which causes the yen to become stronger as Japanese companies repatriate capital. France's large deficits and increasing debt make this scenario much more likely; Hayes thinks they may set off ongoing outflows from French banks and lower repo market activity.

Hayes describes a particular "tighten first, then ease" macro chain reaction. He contends that if French banks left the repo market, U.S. Treasury borrowing expenses may rise, therefore pushing hedge funds into deleveraging. This would then cause the New York Fed to enlarge its Repo Market Program (RMP) and use FIMA facilities, therefore growing the Fed's balance sheet and boosting dollar liquidity. Hayes sees one of the most direct and fast means for this liquidity to flow as cryptocurrencies, therefore making them a main winner of such a case.

Hayes keeps a structurally long position in Bitcoin without a set price goal based on this theory; by the end of 2026, he also holds speculative targets for other cryptocurrencies including ETH at $10,000, ENA at $0.50, and ETHFI at $2.00. Along with ongoing crypto exposure, he advises using EUR/JPY put options as a macro hedge to communicate this view. Hayes' point of view on the crypto market signals a possible rise in risk assets—specifically cryptocurrencies—resulting from FX signals and central bank liquidity injections. He expects these assets will probably soar before or in tandem with official liquidity data.

Get Merlin Pro for $19 $8 a month. Just for now.