BitMEX founder Arthur Hayes said in his Aug. 11 essay "Yen Quake" that growing strain in the yen and the Japanese government bond market could force the Federal Reserve into cross-border currency intervention, using the FIMA facility in a way that effectively expands its balance sheet. In Hayes’ reading, that would amount to a form of "shadow quantitative easing" and could inject fresh liquidity into Bitcoin and other scarce risk assets.
He argued that this may be the macro catalyst that breaks crypto’s current consolidation.
Three paths Hayes laid out
Hayes wrote that both Japan and the U.S. are trying to keep USD/JPY stable, but neither side can absorb a move from 160 to 90, which he described as a fair value level. He then outlined three possible paths forward.
The first is a Bank of Japan rate hike. Hayes said currency markets are fundamentally driven by rate differentials. With the dollar yielding 2.75 percentage points more than the yen, borrowing yen, converting into dollars, and buying Treasury bills remains a positive carry trade. If the BOJ were to hike quickly and trigger a sharp yen rally, primary dealers would be forced to cover positions in a rush. Hayes compared that scenario to traders in Tokyo three decades ago frantically calling around to plug holes in their books.
The second path is for Japanese companies and public institutions to sell overseas assets. Hayes pointed to GPIF, Japan’s largest pension fund, whose investment stance shifted in 2014 to support Abenomics. He said GPIF now holds 13 trillion yen in overseas equities and that any large-scale sale would take years. He also said there are internal disagreements, with senior officials viewing this as the right time to rotate back into domestic assets.
The third path, and the one Hayes favors, is FIMA financing. He wrote that U.S. Treasury Secretary Bessent made a move last week by arranging what he described as America’s first currency intervention since 1998 to support the yen. In Hayes’ breakdown, Japan’s Ministry of Finance would first pledge its U.S. Treasury holdings to the Fed’s FIMA program and receive dollar loans. It would then sell those dollars to buy yen in the FX market, and use the recovered yen to buy back Japanese government bonds and stocks at home.
What "shadow QE" would do
Hayes listed four direct effects from that policy route.
- First, the Fed would create dollars through the FIMA program, and its balance sheet would expand alongside the amount of collateral posted.
- Second, USD/JPY would fall and the yen would strengthen.
- Third, Japanese government bond yields would move lower.
- Fourth, Japanese equities would rise as yen liquidity returns to the domestic market.
He added that Japan currently holds $114.3 billion in U.S. Treasuries, while GPIF holds another $23 billion, giving the system more than $137 billion in FIMA-eligible collateral.
For comparison, Hayes pointed to the pandemic period, when the Fed printed about $4 trillion and expanded its balance sheet from 2020 through the end of 2021. His conclusion was blunt: "The more they print, the more Bitcoin goes up."
Short-term pressure, longer-term liquidity upside for Bitcoin
Hayes also warned that a fast yen appreciation could tighten crypto markets in the short run. He described it as a period in which yen volatility falls and the carry trade unwinds in a more orderly way over several years.
In his view, the sustained liquidity impulse for Bitcoin would come only after the market gets a clear signal that the Fed is expanding its balance sheet.
He said Maelstrom, his fund, is already "heavily long Bitcoin." At the same time, he advised investors to keep cash on hand and wait for Warsh to convene a FIMA working group and announce rule changes.
Hayes added: "Gold and USD/JPY will give you the signal first."
The Taiwan angle raised in the article
The source article also argued that this kind of "shadow QE" matters for Taiwan because Taiwan and Japan are closely linked through trade, and yen repatriation into Asia often leads to a broader repricing of regional assets. If dollar liquidity does expand, the article said Taiwan’s equity market and local crypto market could also benefit from spillover flows.
It also cited the historical relationship between Fed balance-sheet growth and Bitcoin price gains, using the 2020-2021 period as an example. According to the article, roughly $4 trillion in money creation during that stretch coincided with Bitcoin rising from $3,000 to nearly $70,000 at its peak.