Arthur Hayes Predicts Bitcoin Rally From Fed Liquidity Expansion in 2026

BitMEX co-founder Arthur Hayes published a new essay titled "The Ugly" arguing that Bitcoin could surge to new highs in 2026 as United States dollar liquidity expands after a challenging 2025.

Three Pillars of Dollar Expansion

Hayes outlines three mechanisms expected to drive dollar credit expansion: the Fed's Reserve Management Purchases injecting at least $40 billion monthly, commercial bank lending to strategic industries like defense, and up to $200 billion in mortgage-backed securities purchases by Fannie Mae and Freddie Mac to lower mortgage rates.

The Fed ended quantitative tightening in December 2025, shifting to balance sheet expansion amid money market stress.

Why Bitcoin Lagged in 2025

Bitcoin traded in a $87,000-$95,000 range as it tracked declining dollar liquidity, unlike gold boosted by central bank buying and Nasdaq driven by AI nationalization policies.

Investment Positioning

Hayes positions via Strategy and Japan's Metaplanet for leveraged Bitcoin exposure, and his fund Maelstrom accumulates Zcash amid developer changes.

"If Bitcoin can retake $110,000, investors will get the itch to go long Bitcoin through these vehicles," Hayes stated.