Arthur Hayes said the Japanese yen has become the central variable in his current macro trading framework, according to a note published on Aug. 11.
Hayes argued that more than a decade of yen weakness turned the currency into a major source of funding for global corporates and speculators, but said that phase is nearing an end.
Three paths he sees for a stronger yen
Hayes laid out three ways the yen could strengthen: a sharp round of rate hikes from the Bank of Japan, large-scale repatriation by Japanese institutions selling overseas assets, or what he described as the most likely option, intervention through the Federal Reserve’s Foreign and International Monetary Authorities, or FIMA, repo facility.
In his view, the first two approaches would be difficult to carry out.
A rapid increase in Japanese interest rates could push up Japanese government bond yields, widen the Bank of Japan’s book losses, and force yen carry trades to unwind. Hayes said that could hit global stock and bond markets.
He also said a broad sale of U.S. stocks and Treasuries by Japanese institutions such as GPIF, followed by repatriation into Japan, could put pressure on U.S. financial markets.
Why Hayes favors the FIMA route
Hayes said the third option looks more workable. Under his framework, Japan’s Ministry of Finance could pledge its U.S. Treasury holdings to the Federal Reserve, borrow dollars through FIMA, then sell those dollars to buy yen. The yen proceeds could then be put back into Japanese government bonds and equities.
He said that process would require the Fed to create dollar liquidity, with the central bank’s balance sheet expanding alongside the size of FIMA repo operations.
Hayes noted that the current cap on outstanding FIMA loans to a single counterparty is $60 billion. He added that if that limit were removed and the program extended to major Japanese institutions such as GPIF, the amount of dollar liquidity released could be much larger.
Bitcoin, gold, ETH and ENA in his trade setup
Based on that view, Hayes said he remains bullish on Bitcoin, physical gold, and gold mining companies.
He wrote that if the Federal Reserve’s balance sheet starts expanding in size again, 「the more they print, the higher Bitcoin goes」.
Within digital assets, Hayes said ETH stands out as a potential opportunity among large-cap tokens. He pointed to the fact that ETH had not broken its all-time high in 2025 and said Ethereum could become the security layer for real-world assets, or RWA.
He also said he is positive on ENA. If rising dollar liquidity helps push BTC higher, he said stronger Bitcoin basis yields could attract capital back into USDe, giving ENA a path to a 5x move over the next few months.
Even so, Hayes said he has not yet cut his dollar position aggressively to the minimum, because he is still waiting to see whether any actual changes are made to FIMA rules.