Arthur Hayes, chief investment officer of Maelstrom, said in a Sept. 8 appearance on The Rollup that Japan’s shift toward capital repatriation, rising risk in France’s bond market and mounting pressure inside the euro system could push the Federal Reserve to create dollar liquidity at a faster pace. He described EUR/JPY as one of the most important leading indicators for that change.
WuBlockchain, which republished the interview, added an editor’s note saying Hayes is known for strong views and bold forecasts, but that his market calls often change and he has repeatedly acknowledged a high failure rate in prediction. Readers, it said, should not treat his price targets, timelines or trades as investment advice. WuBlockchain also said the interview was shared mainly as a framework for thinking about the links between global liquidity, monetary policy, fiscal systems and crypto markets. It added that the guest’s comments do not represent WuBlockchain’s views and that the transcript and translation were produced with GPT and may contain errors.
Hayes says Japan repatriation may be a fresh catalyst for crypto
Hayes said Kevin Warsh’s remarks themselves were not the key issue and that the more important developments had taken place recently. In his view, Japan has often sat near the center of major shifts in the modern global financial system.
He said that from mid-to-late July, Japanese Finance Minister Satsuki Katayama said domestic institutions should reassess asset-allocation standards, reduce foreign holdings and increase investment in domestic assets. Hayes said the statement was effectively aimed at Japan’s Government Pension Investment Fund, or GPIF, which he described as the country’s largest pension fund and a quasi-government institution. At that time, USD/JPY was around 160 to 163.
Hayes said GPIF’s last major allocation shift came after 2012, when Shinzo Abe pushed Abenomics, used money printing to stimulate the economy and wanted GPIF to raise its allocation to foreign securities and lower domestic securities exposure. He said it took two years to secure formal agreement, including replacing opponents and appointing supporters. Once GPIF published the new framework, markets moved, USD/JPY rose, the yen weakened and Japanese investors moved capital overseas, with others following.
Because of that history, Hayes initially thought any GPIF move to sell U.S. Treasuries and buy Japanese government bonds was still two or three years away rather than an immediate trading issue. He said later events changed that view.
FIMA repo, the G20 meeting and unusual GPIF activity
Hayes said the first yen intervention involved Scott Bessent selling euros and buying yen, while also proposing that the single-counterparty cap at the Federal Reserve’s Foreign and International Monetary Authorities Repo Facility, or FIMA Repo Facility, should be removed. He framed that as pressure on Warsh to do his job and lift the cap.
If that happened, Hayes said, institutions such as GPIF would not need to sell U.S. Treasuries outright. They could instead pledge Treasuries as collateral, borrow dollars from the Fed, sell those dollars for yen in the FX market and then bring the money back to Japan. He added that this was only one part of the picture because a financial subcommittee would still need to be convened by Warsh and agree to the move.
He also said the U.S. Treasury later proposed increasing Treasury buybacks by $20 billion, though he said that was small relative to a roughly $40 trillion bond market. Bessent, Hayes said, also stated last week or earlier this week that the Bank of Japan needed to raise rates faster. The real question, in Hayes’s telling, is not the statement but what action follows.
Hayes then pointed to this week’s G20 meeting. He said he believes some kind of agreement may have been reached offstage during the event and that Japan may finally have received the message. As supporting context, he cited Bloomberg reporting that GPIF held an unscheduled meeting in August. Hayes said August is a holiday month in Japan, making such a meeting unusual. The market does not know what was discussed, he said, but Japan’s government had already called for more domestic asset allocation and Bessent had also pushed Japan to own more domestic assets and sell U.S. assets.
After that, Hayes noted, USD/JPY fell from 160 to 155 in a single trading day, while EUR/JPY dropped by about 3 yen during Asian trading hours. He described those as very large moves.
From there, Hayes said an announcement could come soon: either the cap on the FIMA repo facility would be raised or GPIF had already started adjusting the balance between domestic and foreign assets. He said crypto and other markets reacted overnight. At the same time, he noted that Waller said inflation did not seem as severe and that the Fed perhaps should not raise rates. Put together, Hayes said, the objective is to weaken the dollar and strengthen the yen, which he called one of the Trump administration’s core goals as it seeks to reshape global trade.
For that to work, he said, the yen has to appreciate. Hayes described the yen as one of the world’s most undervalued currencies outside the renminbi. The U.S. cannot act against China in the same way, he said, but it can influence Japan because Japan depends on U.S. security guarantees. In his view, that is one reason crypto has been rising. Markets had been digesting information for some time, and a move in USD/JPY from 160 to 155 without explicit news signaled that something had changed.
Hayes said the move was already underway. Crypto and other assets rose overnight while the S&P 500 was flat or down, and tech and AI trades did not show the same strength. To him, that pointed to liquidity rather than equity-sector enthusiasm. He said more information could emerge in the coming days or weeks showing that a G20 understanding was reached and that arrangements would be introduced to create dollar liquidity, push the dollar lower and lift the yen.
“Japan Inc.” and the reversal of the biggest yen carry trade
Asked directly about carry trades, Hayes said he refers to Japanese society as “Japan Inc.” and sees it as running the world’s largest yen carry trade. If one looks at Japan’s consolidated balance sheet and includes private-sector assets, he said, the country has effectively been printing yen and buying foreign assets for years.
As the yen weakened and assets held by Japan, including U.S. tech stocks, rose in value, Japan as a whole performed well, he said. Rather than focusing on isolated metrics such as debt-to-GDP, Hayes said Japan should be viewed as an integrated entity. He argued that while Japan calls itself capitalist, it has strong communal and socialist traits under the surface. In that sense, he said, “Japan Inc.” exists in practice, and the yen carry trade is a nationwide position with Japan itself as the largest participant.
Once GPIF is told to pivot, Hayes said, “Japan Inc.” follows: selling foreign bonds and equities, selling foreign currency, buying yen, bringing capital home and investing in Japanese government bonds, local companies and real estate. He said that is the government’s instruction. It takes time to start, but once it starts, he said, standing against it is a bad idea.
For the U.S., the problem is that Japan has held these assets for 30 years and helped drive U.S. markets higher. If the U.S. system depends on rising equity prices and ongoing debt issuance to generate financial gains, Hayes asked, how does that trade unwind? His answer was simple: the U.S. can only print money and take over the trade Japan used to run.
He compared that to Japan’s earlier strategy, which he said effectively accepted even a move in USD/JPY to 200 if it meant reflating the domestic economy and dealing with problems left by the 1980s property bubble. The U.S., in his view, is doing something similar now: even if the dollar index fell to 50, that could be tolerated if it helped restore U.S. industrial strength and reduce debt-to-GDP from around 100% to roughly 30%, where it was after a similar earlier strategy. Hayes said it is the same trade in substance. It can take a long time to form, but once in motion, it is difficult to fight.
Hayes says U.S. monetary policy has not been truly restrictive for some time
On the Fed, Hayes said genuinely restrictive U.S. monetary conditions lasted only from December 2021 to October 2023. After that, he said, Janet Yellen began issuing more short-dated Treasuries and bills and drained $2.5 trillion from the reverse repo facility. For holders of crypto and other assets, he said, that marked a return to an uptrend.
He then tied AI into the same macro picture. Hayes said the U.S. has printed large amounts of money over the past five or six decades, and under ordinary arithmetic, interest costs and debt burdens grow exponentially, making the problem almost impossible to solve through growth alone. AI, he said, arrived as the new answer: if the U.S. develops AI and wins the AI race with China, the debt problem fades and productivity surges.
That, he said, is why Warsh, Trump, Bessent and others keep talking about AI. In his view, it is the only narrative that allows politicians to tell voters not to worry about how much the government has spent or why government spending as a share of GDP is above prior peaks outside war or pandemic periods. Hayes added that those figures may not even know what AI really means and are instead buying the story sold by Dario, Sam and Elon.
He said AI will also be folded into the same policy response. If AI is the only political explanation for deficits and spending, then what happens when large AI labs come under pressure because their unit economics do not work? The answer, Hayes said, is that governments rescue them, and the rescue means more money.
In that framework, he argued, Japan-related trade changes and Europe-related stress both push the U.S. toward creating more money, while AI gives policymakers a face-saving reason to do it. He said governments have already wasted trillions of dollars on what he called hallucination-producing chatbots, and that this too becomes a reason to inject more funds into markets. Together, he said, those forces support new highs in crypto assets.
AI capital misallocation and the case for Bitcoin and gold
The hosts noted that over the past 6 to 18 months, Bitcoin’s fiat-debasement trade appeared to lag while gold rose and tech stocks, AI capex and storage names outperformed. Hayes said yes, he believes the turn is starting now and that the setup is favorable for both Bitcoin and gold.
He cited the latest cover of The Economist, which a friend had sent him, saying it portrayed Nvidia CEO Jensen Huang like a wizard, as if Nvidia had no cash-flow issues, no circular financing, no supplier financing and no accounting tricks resembling “Enron 2.0,” and as if adding an AI chatbot made it the best company in history. Hayes said that kind of presentation is a sign of a market top and added that when The Economist tells you something, the right trade is often the opposite.
According to Hayes, the backdrop favors Bitcoin and gold because politicians can no longer stop spending. To do so, they would have to admit major mistakes tied to data centers, social media and the use of consumer data by tech firms. If governments admitted there was a problem with the AI push and changed direction, they would have to remove support for the sector, force figures such as Elon to bear their own cost of capital, stop providing special regulatory treatment and stop using U.S.-China competition as a nationalist rationale for channeling more investment into unprofitable companies.
At that point, Hayes said, companies would need to make money or fail. Firms such as Anthropic should disclose real profits, not just revenue, and if they continue burning cash, they should show the unit economics of inference businesses so that IPO buyers or secondary-market investors can evaluate them properly. He then said plainly that this is not how politics works.
That is exactly why Bitcoin, gold and similar assets should perform well, in his view. He said the market has entered a phase of capital waste and that governments will create large sums of new money to roll these loans and hide prior mistakes because they cannot admit they squandered enormous amounts of capital.
“AI people do not have cash, they have paper assets”
Asked whether the eventual buyers of crypto would be AI insiders rotating out, macro investors, companies or funds, Hayes said the whole process is fundamentally about central-bank balance-sheet expansion. He said he cannot identify the specific buyer who will purchase Bitcoin.
In fact, he said many venture capital firms may suffer steep losses. Those firms have told their own investors that they posted spectacular mark-to-market returns by backing AI labs. Hayes said Anthropic may still be able to list publicly, but it needs to do so quickly because skepticism is rising. OpenAI, he said, faces an even harder path and may need a government rescue or some sort of merger. Sam Altman, he said, would need impressive financial engineering to get a deal done, while Anthropic’s outcome would depend on whether Dario Amodei can pull it off.
Still, Hayes stressed that much of the venture capital in the sector is effectively trapped. If these companies list and then fall 50% to 60%, and liquidity dries up, he said he does not know how those funds will deliver the DPI they promised investors without a government rescue. So this is not a story about “AI people buying crypto,” because, as he put it, AI people do not have cash; they have paper assets.
If central banks keep pushing those assets higher, some of them may be able to exit, raise cash and then buy crypto, he said. But the cleaner way to understand the move is that central banks expand balance sheets broadly to cover up capital misallocation, and Bitcoin was made for that environment. Hayes compared it with 2009, when policymakers expanded balance sheets to mask capital misallocation in housing. This time, he said, the same mechanism applies, only at larger scale and with AI debt replacing housing debt.
The market sets the narrative, not policymakers
When the hosts asked who is controlling the narrative now, Hayes said Bessent is more like a firefighter. The real narrative setter, he said, is the market itself. A 10-year U.S. Treasury yield at 4.8% sets the narrative, and so does USD/JPY at 160. Bessent, he said, is simply the one competent official trying to keep a set of spinning plates from crashing by striking one deal here and another there.
Hayes argued that policymakers are entirely constrained by markets and can only react under the weight of imbalances built over decades. In the end, he said, those imbalances trace back to the post-World War II order and the cumulative interaction of many events over close to a century. Individual politicians matter, but not enough to overpower arithmetic and compounding.
Why Hayes thinks the Fed chair eventually falls in line
On who controls the money printer, Hayes said Warsh, as Fed chair, controls the balance sheet and can create money in operational terms. But he pointed listeners to Arthur Burns’s 1979 speech, “The Anguish of Central Banking.”
Hayes said the core point of that speech is that every Fed chair begins by believing in sound money and by declaring support for central-bank independence. In the end, though, they remain part of the U.S. political system. If the public elects politicians who support a particular spending agenda, he said, what standing does a Fed chair really have to oppose it?
That leads to his broader conclusion: no matter how strongly a Fed chair claims to defend independence and the dollar’s value, the practical duty is still to accommodate the spending chosen by the electorate. Eventually, Hayes said, money gets printed and the president gets what he wants in one form or another. History has shown the same result under both Republican and Democratic administrations. What a person said before taking the job matters less than what the system demands once they are in it.
Hayes also said Warsh reportedly resigned from the Fed around 2011 because he opposed quantitative easing. Over the next 15 years, he said, Warsh made many hawkish statements from the private sector, but those views did not shape policy. Now that he is back in the institution, Hayes said, he has formed a working group, which in the end will only produce a report.
Asked whether Warsh would raise rates at the meeting in a week or two, Hayes said he expects rates to remain unchanged. He said policymakers can always find some third-derivative inflation measure that excludes what people actually buy and then claim the year-over-year change is falling, giving them cover to hold steady.
At the same time, Hayes said nominal U.S. economic growth in the previous quarter was about 8%, while short-end rates were only 3.5% to 3.75%. He called that textbook behavior. By holding rates unchanged, Warsh can still appear hawkish while also claiming that reserve-management purchases are not real balance-sheet expansion or QE, but merely technical repo-market operations. Most U.S. voters do not understand the repo market, Hayes said, so that explanation may be enough. Bessent, meanwhile, keeps trying to prevent the broader system from breaking on his watch.
Bitcoin may break its all-time high by year-end, but Hayes expects turbulence
On the market outlook, Hayes said Bitcoin could break its all-time high before the end of the year. He also said that before the U.S. midterm elections, the government cannot let its true intentions become too obvious.
In his view, affordability is the central concern for U.S. voters, and Trump must find a way to explain why policy easing does not amount to money printing. Hayes added that if Bitcoin were at $500,000 the day before an election, he is not sure that would actually help Trump, even if global crypto holders would welcome it.
So there are two forces at once, he said. Structural pressures point toward more money creation, and markets know it. But politicians still have to manage a visible political calendar and cannot look as though they are instructing the Fed to print. Hayes cited a Wall Street Journal opinion piece by Scott Bessent and said most Americans now see the Fed as a creator of inequality. Because of that, the government must preserve the appearance that it still cares about the purchasing power of taxpayers’ earnings.
Hayes said he remains very bullish and agreed with the long-term optimism expressed by earlier guests on the show. But the path, he said, is likely to be choppy: a sharp move up, then a period of sideways trading, perhaps a pullback, and then another move higher. As the system inches toward large-scale money creation, he expects that rhythm to repeat.
Why ETH is one of Maelstrom’s larger positions
The hosts then asked about Hayes’s earlier comment that he had built what might be his largest-ever Ether position. Hayes said Ethereum is one of the least loved large-cap tokens in the market. If an investor wants more risk than Bitcoin but does not want the possibility of waking up to a 75% overnight decline because something broke at the protocol level, he said, ETH is a reasonable choice.
He also said Ethereum was one of the worst-performing large-cap tokens in the last cycle and still has not exceeded its 2021 high near $5,000. For that reason, he said, the risk-reward looks very good. That is why ETH is one of Maelstrom’s larger positions for this liquidity-driven rally.
He added that the firm also holds smaller positions in other assets with similar logic, including ether.fi and Ethena.
Why EUR/JPY matters as a leading signal for faster dollar liquidity creation
Hayes spent considerable time on his EUR/JPY thesis. The hosts framed dollar-liquidity creation as the core of the fiat-debasement trade and said an acceleration in that creation is effectively a second derivative. Hayes replied that his team had already added exposure before the Fed’s balance sheet made a visibly larger move.
He said the balance sheet is indeed rising now, but not on the scale seen during the pandemic or in 2009. That, he said, is why Bitcoin moved from around $63,000 to $80,000 rather than posting something more extreme.
For the Fed to justify a much larger balance-sheet expansion without a severe political backlash, Hayes said, it would need a real crisis. On the yen side, the crisis is that the long-yen side of the EUR/JPY trade, including GPIF, Nomura and Japanese retail investors often referred to as “Mrs. Watanabe,” is selling foreign assets because the Japanese government has told them to do so. To stop them from dumping assets directly, he said, those institutions need loans so they can fund through repo instead. That becomes one pillar of balance-sheet expansion and also supports a stronger yen.
On the euro side, the problem sits in the repo market. Hayes said major French banks led by BNP Paribas, Crédit Agricole and Société Générale account for about 20% of that market. If the euro side comes under strain, he said, France would be hit first because Japan holds a large amount of French debt.
If Japan cannot sell U.S. assets because the U.S. maintains major military bases in Japan, Hayes said, then Japan can sell European assets instead, and the first assets on the block would be French ones, including OATs and French bank bonds.
As conditions in France worsen, he said, France cannot legally print on its own under euro-area rules. Yet newly empowered French politicians may decide their duty is to France rather than to the European Union. France needs more money and needs devaluation within the euro system, Hayes said. If it does not leave the euro, the government could still pressure the Banque de France to carry out domestic QE. That would not be legal under EU rules, he noted, but Paris might try to justify it as necessary to save the local bond market.
On the other side, Hayes said the EU could tell Le Pen and Mélenchon that it has the ability to create euros and save the French bond market, but it will not buy French debt if they refuse to submit. Because neither side wants to compromise within its own power structure, Hayes said the result could be a de facto “soft Frexit.” That is the logic behind his euro-short view.
He also said the Fed has already shifted to QE since last December to support the repo market. Since the repo market finances short-dated U.S. government paper and Scott Bessent is the biggest issuer of that paper at present, Hayes said all of these questions are ultimately part of the same trade.
If EUR/JPY drops from around 182 to 140 or even 120, Hayes said, the French banking system would face severe problems that could only be addressed through money creation. That could also point toward the end of the euro system because France cannot print unilaterally without the European Central Bank as the central authority.
He added that if French banks begin to fear capital controls at home or the emergence of some quasi-euro-lira arrangement, they would need to leave the U.S. repo market and move capital back to France. If that happens, the commercial-bank balance sheet the Fed thought it could rely on disappears.
That, Hayes said, would force the Fed to increase reserve-management purchases, and he believes it is already doing so. The Fed can cite duration and other technical reasons to argue that this is not QE, he said, and can hope the public does not understand what is happening. In his telling, that is how money gets created on the euro-short side of the trade, and it is why EUR/JPY captures whether the two concrete triggers that would force faster U.S. money creation have begun.
He said the real moves that could take Bitcoin to $250,000 or $500,000 are not Bessent’s policy hints but actual changes of this kind.
AI assets may still rise, but scarce assets may do better
On portfolio construction, Hayes said that if investors made a lot of money in AI, it was because the rate of change in AI development was extremely high in 2025 and 2026. He said that phase is now over. That does not mean AI-related assets cannot keep rising, only that their gains may not match what was seen before because the market has shifted into the “was all that spending correct?” stage, which is often where tops form.
He said the Nasdaq could still rise another 40%, 50% or even 60%. But at the same time, Bitcoin could reach $1 million, gold could reach $15,000 and defensive names such as ExxonMobil could also rise by multiples. In other words, AI assets may still climb, but they may lag other asset classes. Which alternatives to choose depends on each investor’s knowledge and preferences, he said.
Hayes added that he is obviously focused on crypto. In this macro environment, he sees Bitcoin as the fastest horse, one side of the barbell. The other side comes later and depends on which assets benefit when people start believing politicians are no longer going to keep printing money.
He said that shift likely would not happen before the 2028 U.S. presidential election. At that point, Democrats in opposition may campaign on higher taxes because the richest people made a great deal of money in this cycle while ordinary people became poorer and inflation rose. Whether Democrats actually raise taxes is not the main point, Hayes said. The point is that markets would begin to fear they could win, and he thinks they likely could because U.S. politics tends to swing like a pendulum. If that happens, markets may start to price in less money creation than previously expected, and investors would need exposure to the other side of the barbell.
Hayes said he personally owns a large interest in a volatility hedge fund that expresses this view through options-style trades. Other investors, he said, could choose different kinds of companies that should still perform well when the money printer stops and monetary conditions tighten again.
His current view on HYPE and Zcash
Near the end of the discussion, the hosts argued that crypto seems to be entering a stage where projects can show real operating results, one reason they think the bear market is over. Hayes replied briefly: “Great, hope so.”
Asked where he would buy back into Zcash, Hayes first turned to HYPE. He said he still does not like HYPE’s current risk-reward. That does not mean it cannot keep going up. He said it almost certainly can. But with the same risk capital, he believes Ethena may offer more upside.
As for Zcash, Hayes said he is still watching progress on formal verification and related work.