In his latest essay, Arthur Hayes, the founder of BitMEX, articulates a contrarian perspective on the recent downturn in Bitcoin’s price, refuting the mainstream narrative that attributes the decline to outflows from the Grayscale Bitcoin Trust (GBTC). Instead, Hayes points to macroeconomic maneuvers and monetary policy shifts as the real drivers behind Bitcoin’s volatility. Monetary Policy And Market Reactions Hayes kickstarts his analysis by shedding light on the US Treasury’s recent strategic shift in borrowing, a decision announced by Janet Yellen on November 1. This pivot towards Treasury bills (T-bills) has triggered a substantial liquidity injection, compelling money market funds to reallocate their investments from the Fed’s Reverse Repo Program (RRP) to these T-bills, offering higher yields. Hayes articulates the significance of this move, stating, “Yellen acted by shifting her department’s borrowing to T-bills, thus adding hundreds of billions of dollars’ worth of liquidity so far.” However, he contrasts this tangible financial maneuver with the Federal Reserve’s mere rhetoric about future rate cuts and the tapering of quantitative tightening (QT), pointing out that ..
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