Arthur Hayes Connects Upcoming Bitcoin Surge to U.S. Government Reopening

The cryptocurrency market has been struggling in recent weeks, with Bitcoin (BTC) dipping below $100,000. Amid discussions about a potential end to the bull cycle, market expert Arthur Hayes has identified a crucial event that could reignite bullish sentiment in the market.

According to Hayes, the resurgence of the bull run is directly linked to the U.S. government’s plan to end its shutdown and subsequently inject liquidity into financial markets. He mentioned that if the government ensures there is sufficient cash flow within the financial system, BTC could reach new all-time highs.

Understanding U.S. Government Debt Funding

Hayes elaborated in his article “Hallelujah” that persistent dollar supply will support the government’s borrowing capacities, as authorities prefer to issue debt rather than raise taxes. This strategy will likely result in an expanding Federal Reserve balance sheet, positively impacting Bitcoin and cryptocurrency prices.

Various financial stakeholders, including money market funds and commercial banks, can enhance liquidity by purchasing Treasury bills. This increase in government-issued debt would raise the overall money supply.

However, the ongoing government shutdown has disrupted this process, preventing an influx of cash into the crypto market.

Release of Extra Liquidity

The shutdown, now extending into its second month, has led the Treasury to borrow funds without adequate spending. Hayes stated that the Treasury’s General Account exceeds its $850 billion target by about $150 billion, indicating a pending release of liquidity once the shutdown concludes.

Hayes anticipates a turbulent market as long as the shutdown remains intact, emphasizing that the lack of liquidity is a significant factor in the current downturn. He warns traders against panic selling during this weak phase, as historical patterns underline the reliability of “dollar money market plumbing.”