What to know:
- Hayes expects Bitcoin price to reach $126,000 by end-2026 as US debt strains markets.
- Treasury buybacks support bond liquidity but do not amount to Federal Reserve stimulus.
- Hayes links a $500,000 Bitcoin scenario to FIMA changes that the Fed has not announced.
Arthur Hayes expects the Bitcoin price to return to $126,000 by the end of 2026. The BitMEX co-founder links his forecast to rising US debt and possible dollar liquidity. However, the required policy changes have not happened.
Hayes outlined the view in a recent Altcoin Daily interview. He said pressure in government bond markets could eventually lead authorities to add liquidity.
The $126,000 target would place Bitcoin near its October 2025 record. He also backed that level in May after arguing that BTC had bottomed near $60,000.
US gross federal debt reached $40.047 trillion on August 18. This included $32.266 trillion held by the public and $7.782 trillion in intragovernmental holdings. Federal interest costs have also risen sharply.
Why Does Hayes Expect the Bitcoin Price to Reach $126K?
He explains why high borrowings and high interest costs have led to higher Treasury rates, which are more difficult to maintain. The Treasury may respond if stress continues in the markets.
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There is a statement from the Treasury, dated August 19, about long-end liquidity-support buybacks, which will be doubled from $2 billion maximum per transaction to $4 billion per operation. This increase will apply to 10- to 30-year securities from September 9 to November 4.
These buybacks seek to enhance liquidity in longer-dated Treasury securities. The operations are debt management-related operations, rather than Federal Reserve quantitative easing. There is nothing in the announcement about monetary stimulus.
Bitcoin has increased in value following the Treasury announcement. Yields fell, and a short squeeze contributed to the rally. Still, the coincidence of timing does not make the buyback decision the reason for the move.
How Could FIMA Influence the Bitcoin Price?
Hayes also brought up the Foreign and International Monetary Authorities Repo facility by the Fed. It permits approved foreign central banks and international accounts to swap Treasury securities for dollars.
The standing facility has a daily limit of $60 billion per counterparty. The Federal Reserve says it offers approved foreign account holders an alternative to selling Treasury securities in the open market. This arrangement can support the smooth functioning of the US Treasury market.
He said removing or raising FIMA’s counterparty limit could release more dollar liquidity into financial markets and support Bitcoin. However, the Federal Reserve has not announced any change to the facility.
FIMA deals involve temporary, collateralized repo loans. They don’t buy any Bitcoin nor promise to provide funds for crypto markets. The benefit is therefore Hayes’ theory and not an actual occurrence.
The host introduced a hypothetical Bitcoin price drop to $35,000. Hayes discussed a possible cause but did not forecast the decline.
According to Hayes, forced selling by Strategy would spark a capitulation event. He sees it as similar to the March 2020 crash. The host could have an easy time buying Bitcoin afterwards if authorities loosen monetary conditions.
The interview then considered a rapid Bitcoin move to $120,000. He said removing FIMA’s counterparty limit could trigger that rise. He added that the Bitcoin price could then move toward $500,000.
That $500,000 is a conditional scenario, but not a year-end price target by Hayes. His forecast still stands at $126,000.
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