In a recent essay dated March 31, former BitMEX CEO Arthur Hayes presents a compelling case for a Bitcoin price target of $250,000 by the end of the year. His argument is founded on the conviction that the US Federal Reserve has largely surrendered to fiscal dominance and has covertly resumed quantitative easing (QE) in the US Treasury markets.
The essay blends sharp satire with a thorough macroeconomic analysis, contending that the Fed’s recent policy shift marks a significant return to fiat liquidity expansion—an atmosphere traditionally favorable for Bitcoin and other hard assets. “Powell demonstrated last week that fiscal dominance remains very much alive,” Hayes asserts. “Thus, I believe that QT, particularly concerning treasuries, will halt in the short to medium term… Bitcoin is poised to surge once this is officially confirmed.”
QE Makes a Comeback, Fiat Falters, Bitcoin Rises
The focus of Hayes’s argument is on the Federal Reserve’s March FOMC meeting, where Chair Jerome Powell indicated that the process of balance sheet reduction—known as Quantitative Tightening (QT)—would be significantly slowed. Powell remarked: “We are very keen on allowing the MBS [mortgage-backed securities] to expire from our balance sheet at some point. We will carefully consider letting the MBS roll off while keeping the overall balance sheet size constant.”
This policy approach, which Hayes dubs “QT Twist,” suggests that the Fed will reinvest proceeds from MBS runoff into US Treasuries, thus bolstering bond prices while maintaining a steady nominal balance sheet. Hayes describes this as a form of “treasury QE,” even without the official terminology.
“If the Fed’s balance sheet remains constant, they could purchase a maximum of $35 billion per month in treasuries, or an annualized total of $420 billion,” Hayes calculated. He also points out that the reduction of Treasury QT from $25 billion to $5 billion per month signifies an annualized increase of $240 billion in dollar liquidity.
To illustrate the political constraints facing the Fed, Hayes introduced a satirical exchange where Powell faces pressure from Treasury Secretary Scott Bessent—an imaginative depiction that highlights monetary policy’s subservience to fiscal demands. In this dramatized scenario, Bessent tells Powell: “At next week’s FOMC, you will begin tapering QT for my treasury bonds and announce that QE for treasury bonds will commence soon. Are you clear?”
Hayes reinforces his argument by drawing historical comparisons to Arthur Burns, the Fed Chair during the inflationary 1970s, who acknowledged in his 1979 speech “The Anguish of Central Banking” that political influences constrained the Fed’s ability to control inflation.
Burns stated: “The Federal Reserve was entangled in the philosophical and political currents shaping American life and culture… Monetary policy ended up being dictated by the need to underplay the inflationary process while still accommodating many marketplace pressures.”
Hayes perceives a similar situation today, exacerbated by the government’s escalating debt load and the urgent need to finance deficits at manageable yields. Trump’s Policy Agenda
Hayes links the Fed’s shift to the political landscape surrounding a potential second Trump administration, particularly its commercial policy objectives. Trump has declared an intention to reduce the US fiscal deficit from 7% to 3% of GDP by 2028 while promoting domestic manufacturing, maintaining defense spending, and avoiding cuts to social benefits.
However, Hayes contends these goals are mathematically unfeasible without the backing of the central bank, given the monumental scale of debt issuance needed. “The numbers simply don’t add up unless Bessent can locate a buyer for treasuries at an uneconomically high price or low yield. Only US commercial banks and the Fed possess the capacity to purchase the debt at a level the government can sustain.”
To unlock this potential, Hayes predicts that the Fed will not only cease QT but also exempt banks from the Supplementary Leverage Ratio (SLR)—a crucial regulatory limitation on bank investments in U.S. Treasuries.
Bessent himself alluded to such a possibility on the All-In Podcast, commenting: “If we eliminate [SLR], we could potentially lower treasury bill yields by 30 to 70 basis points. Every basis point translates to a billion dollars annually.”
Hayes argues that Bitcoin is exceptionally positioned to gain from this shift in the monetary landscape. Unlike stocks, which are woven into the state’s legal and political framework, Bitcoin stands as a bearer instrument inherent to the digital domain, free of counterparty risk.
“Bitcoin is traded based solely on market expectations regarding the future supply of fiat,” he explained. “If my analysis holds true… it suggests that Bitcoin hit a local low of $76,500 last month, and we are now on the path to $250,000 by year-end.”
Referring to gold’s reaction to QE1 during 2008–2009, Hayes emphasizes how liquidity injections can cause a delayed yet dramatic repricing of anti-fiat assets. He believes Bitcoin is now serving the same role that gold once did—only more rapidly and with greater direct global exposure.
Hayes also shared insights into Maelstrom’s capital allocation strategy. “We do not use leverage and make purchases in small increments relative to our total portfolio size,” he noted. “We have been acquiring Bitcoin and altcoins at various levels from $90,000 down to $76,500.”
As of the latest update, BTC was trading at $83,500.
