Arthur Hayes Says Fed Money Printing Could Drive BTC Toward $3.4M

Arthur Hayes is the co-founder and former CEO of BitMEX. He believes a major shift in U.S. monetary policy could occur under a Trump administration. This change may involve aggressive money-printing by the Federal Reserve. Hayes suggests it could significantly impact financial markets.

Hayes wrote about the economic program proposed by Buffalo Bill Bessent in a recent essay. He likened the coordination of the interest rates between the Fed and the Treasury during World War II. The Fed kept the interest rates flat across the yield curve at that time.

Hayes believes the Fed’s existing tools could inject over $15 trillion into the U.S. economy by 2028. He suggests this massive credit expansion would reshape financial dynamics. He said it could push Bitcoin‘s value to as high as $3.4 million today.

What Changed Between 1942–1951 and Today-Arthur Hayes

The analysis by Hayes, who recently predicted a market dip, starts with the Treasury-Fed Accord 1942-1951. Then, the Fed limited short-term Treasury bills to 0.675% and long-term bonds to 2.5%.

The historical yield curve was steep and well-controlled. In contrast, the current curve is flatter, though both short- and long-term yields remain above 4%.

This steepness in the past allowed regional banks to make profitable lending to the small and medium-sized businesses (SMEs). They represent about 46% of U.S employment.

Contrastingly, the current flatter curve dissuades this lending. Also, the credit is concentrated in the hands of bigger businesses and institutional borrowers. According to Hayes, the high-yield curve of the 1940s is a blueprint for how the United States economy could be reindustrialized.

The government can lower the cost of servicing its debts by raising the long-term price of borrowing money. Short-term rates are kept low to boost bank lending to small businesses. This also helps support large-scale industrial policy initiatives.

Mechanisms: How the Fed Could Enforce Yield Curve Control

Hayes notes that the Fed can employ its contemporary instrument to replicate the yield curve control (YCC) used in the 1940s. The Fed pinned the short-term yields by setting the interest rate paid on reserves (IORB) and discount window borrowing rates.

The Fed can purchase long-term Treasury securities under its System Open Market Account (SOMA). These purchases can be virtually unlimited to control yield levels. This strategy also expands the Fed’s balance sheet significantly.

Such a strategy would give regional banks a more secure lending margin, such as short-term and long-term lending. This would allow credit generation to be directly passed on to SMEs instead of through non-bank institutions or capital markets.

Framer Hayes sees this as a shift from Wall Street-driven credit to Main Street-focused lending. He views it as reversing decades of financialization. Hayes links the potential policy shift to political influence over key financial institutions.

He points to the Federal Reserve Board of Governors (FBOG) as a central player. The Federal Open Market Committee (FOMC) drives this change. The FBOG establishes the IORB. It regulates the banks by watching over them. Also, the FOMC controls open-market operations, such as SOMA.

The Federal Reserve Board of Governors (FBOG) currently has seven members. Hayes notes that Trump-aligned governors now hold three seats due to recent resignations and confirmations.

There is a potential fourth seat, which can become vacant by early 2026. This could also allow Trump to have the majority and pressure the FOMC to accommodate his policies.  Hayes believes Fed governors can influence a drop in the Fed Funds rate.

They could do this by setting the Interest on Reserve Balances (IORB) below the target range. This creates arbitrage opportunities for banks, pressuring the FOMC to adjust its policy.

He also highlights the role of FBOG in approving district bank presidents who rotate to FOMC. Trump could secure a 7-vote majority on the FOMC by reshaping leadership across key positions. This would give him strong influence over U.S. monetary policy by mid-2026.

Hayes warns that large-scale money creation and fixed yields could weaken the U.S. dollar. He sees this as a threat to its value compared to gold and other fiat currencies. Similar patterns occurred between the 1940s and 1970s.

The dollar lost strength during that time, and gold was significantly revalued. According to him, the price of Bitcoin is one of the most beneficial assets in this environment.

He emphasizes that the Bitcoin target of 3.4 million is not a strict forecast but a directional one. However, it shows the asymmetry of hard assets upon vigorous monetary growth.

Hayes forecasts that Bitcoin could rise in value by 30 times under these Fed policies. He estimates its price could reach around $115,000.