Arthur Hayes on how bitcoin could reach $1m

The first cryptocurrency remains in a bull run with a $1m target and, in the worst case, further correction to $70,000, said former BitMEX chief Arthur Hayes.

In a new essay, “Kiss of Death”, the analyst viewed digital gold through the lens of public debt and ways to reduce it.

He called the unfolding melodrama “Days of Our Emperor” ruinous, questioning the ability of the “real-estate showman” who became president to finance his political goals.

Hayes is convinced that Trump is ready to tackle economic problems by ramping up borrowing.

In that context, the interaction between the US Treasury and the the Fed matters: increasing the quantity of money/credit (“the printing press”) and lowering its cost (interest rates).

The former BitMEX CEO calls Fed chair Jerome Powell a turncoat, arguing that he “defected to the Democrats” by cutting rates in September 2024—when it was not needed—to boost Kamala Harris’s election chances. After the Republican’s victory, the Fed chair pivoted to a hard fight against inflation, he says.

In Hayes’s view, restoring America’s “financial health” will be hampered because Powell and US Treasury Secretary Scott Bessent “serve different masters”.

The latter has officially stated the need to lengthen the average maturity of US Treasuries to exit the debt crisis. For investors, the point is that Washington will avoid default by cutting the net present value of obligations.

Powell and the Fed, for their part, control the amount and price of credit via a range of tools. Hayes deems it a non-trivial task for Trump to persuade Powell to print money and cut rates while preserving the central bank’s anti-inflation mandate.

Trump’s plan

The “Emperor” could “maneuver” Powell by inducing a recession—or convincing markets one is coming. In that scenario the Fed chair would cut rates, end quantitative tightening (QT), restart quantitative easing (QE) and/or suspend the supplementary leverage ratio for banks as it applies to US Treasuries.

How could Trump unilaterally trigger a recession? Hayes sees Elon Musk’s Department of Government Efficiency (DOGE) as the instrument. The latter could curb government outlays and, via the multiplier, produce negative GDP growth.

The agency could control government spending by stopping fraudulent payments and replacing civil servants with computers. Annual losses from waste and inefficiency amount to hundreds of billions of dollars, Hayes believes.

Trump and DOGE fire thousands of civil servants, posing a threat to the labour market. In 2025, such a policy would cut the workforce by 400,000, the analyst noted.

The economic effects are already being felt: jobless claims are rising, housing prices and consumer spending are falling. The market expects a recession.

In this regard, Hayes wonders whether Powell will act proactively or react only once problems emerge.

This year, $2.08 trillion of corporate and $10 trillion of Treasury debt must be rolled over. If the US faces a recession, extending bond maturities will be nearly impossible. The Fed would have to act to protect the financial system.

The cost of crisis

By Hayes’s calculations, each 0.25% rate cut equates to $100 billion of liquidity. If rates were cut to zero from the current 4.25%, $1.7 trillion would flow into the financial system. Ending QT would release $60 billion a month, or $540 billion by year-end.

Restarting QE and/or relaxing the leverage ratio for banks would add another $0.5-$1 trillion.

All told, Hayes expects $2.74-$3.24 trillion—70-80% of the Covid-era total, when stimulus from 2020 to 2022 reached $4 trillion.

Back then, bitcoin rose 24-fold from its 2020 lows to its 2021 highs. Given the asset’s larger capitalisation today, a 10x multiple is a fair expectation. Thus, by Hayes’s reckoning, bitcoin would rise to about $1 million.

Key premises:

• Trump will finance the “America First” strategy with debt;
• the US president will use DOGE to cut government spending and increase the likelihood of recession;
• the Fed will respond with measures that raise the quantity of money and lower its price.

On a crypto reserve, the former BitMEX head remains sceptical. He argues that to have a real impact on prices the government would need to start buying digital assets. For that, Trump would need Republican help to raise the debt ceiling or revalue gold. The expert urged “not to rush this rally”.

Trading strategy

According to Hayes, bitcoin’s current dynamics flag a liquidity crunch despite lofty US stock indices. A Wall Street correction driven by recession fears is inevitable. In such conditions, the first cryptocurrency will ride a rollercoaster, he forecast.

Panic—and Fed action—will not be long in coming. Digital gold will find a bottom and then rise as the fiat financial system descends into chaos.

The downside in the worst case is the previous cycle’s all-time high of $70,000. Hayes allows that this level may remain out of reach. That scenario would be possible if the S&P 500 and Nasdaq 100 fell by 20-30% from their ATH.

“Regardless, we will cautiously ‘nibble at the bottom’ without leverage in anticipation of a crisis in fiat financial markets, before bitcoin reaches $1,000,000,” the specialist concluded.

In February, Hayes said the price of the first cryptocurrency could fall to $70,000 amid outflows from exchange-traded funds.

Earlier, CryptoQuant CEO Ki Young Ju forecast a prolonged consolidation in a wide range (for example, $75,000-100,000), as seen in early 2024 before prices returned to an upward trajectory.