How US Treasury's $1tn Liquidity Injection Will Send Bitcoin Price to $100,000

Arthur Hayes says Janet Yellen will keep the economy strong to help Kamala Harris win the election. To do so, the US Treasury will inject up to $1 trillion into the market before the end of 2024. That would push Bitcoin to at least $100,000. said the co-founder of BitMEX.

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Altcoin season soon?Injecting $1 trillion Crypto market movers What are we studying?

The US Treasury is about to unleash a barrage of liquidity that will push Bitcoin past its all-time high of $73,700.

This is according to Arthur Hayes, co-founder of BitMEX and one of crypto's leading macroeconomic analysts.

“The next stop for Bitcoin is $100,000,” Hayes wrote that In a blog post on Tuesday.

“The combination of a dollar liquidity-fueled bitcoin and ether rally creates a strong foundation for the return of the sexy shitcoin soiree later in the year,” he added, referring to cryptocurrencies that aren't bitcoin or ether.

Altcoin season soon?

US Secretary Janet Yellen wants to keep the economy humming so that Vice President Kamala Harris can win the presidential election, Hayes argued. Harris Sworn in Yellen to the role in 2021.

To ensure Harris succeeds, the Treasury will inject a significant amount of liquidity into the economy before the end of the year, Hayes said.

This is great news for Bitcoin, which has been doing extremely well during a period of rapidly increasing monetary conditions.

“If this relationship holds true, Bitcoin will quickly recover the dump caused by the strengthening yen,” Hayes said.

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And if Bitcoin goes to the moon, Hayes says, the rest of the crypto market will follow. He predicts Solana will rise 75% to $250 — just $10 shy of its all-time high.

“Altcoin season will only return once Bitcoin and Ether break $70,000 and $4,000 respectively,” he said.

Injecting $1 trillion

The Treasury has two ways to inject liquidity into the system, Hayes said.

The first is to empty the reverse repo program, which is a pool of money Valued at $321 billion. The Federal Reserve created the scheme during the pandemic as part of its quantitative easing program.

The Federal Reserve encourages banks to keep their funds at RRP by paying interest on their deposits. But the US Treasury can withdraw funds from the RRP by issuing Treasury bills with higher yields, Hayes argued.

The US Treasury recently announced that it will issue $271 billion worth of bonds by December 31.

It buys $30 billion worth of off-the-run Treasuries — older and less liquid bonds — each quarter through a buyback program. That move would be equivalent to issuing another $30 billion in Treasury bills, Hayes said.

That means a total of $301 billion is likely to exit the RRP and flow back into the economy by tapping Treasury bills ahead of the election.

But there is a second way to inject money into the treasury system.

It could spend $750 billion in the Treasury's General Account, which serves as the government's own checking account, under the guise of averting a government shutdown, Hayes said.

Hayes said that injecting between $301 billion and $1 trillion into the markets before the end of the year “will create an incredible bull market in all kinds of risk assets, including crypto, around election time.”