BitMEX co-founder and Maelstrom chief investment officer Arthur Hayes argues that Treasury Secretary Scott Bessent is running the same monetary playbook that former Secretary Janet Yellen used in 2023. According to Hayes, if the pattern holds, historical multiples point to a high price target for Bitcoin.
Bessent's Treasury recently doubled long-term bond buyback operations from $2 billion to $4 billion per operation. Hayes notes that this policy mirrors the liquidity mechanics that occurred during Yellen's tenure, when the government faced high spending and a need to defend the 10-year yield below 5%.
The Mechanics of Treasury Issuance
During 2023, Yellen shifted issuance toward short-term bills, which drained the Federal Reserve's reverse repo facility from $2.5 trillion down to approximately $100 billion. This drawdown lasted until January 2025, when Bessent took office, directing cash into bank reserves.
Bessent's current strategy involves similar maneuvers, with officials weighing whether to utilize the roughly $950 billion Treasury General Account to fund larger purchases. Citadel Securities has criticized this approach, warning that the strategy resembles financial repression that could potentially weaken the dollar and increase inflation.
Market Impact and Caveats
Applying the 2.84x multiple seen between mid-2023 and March 2024 to Bitcoin's recent price near $78,800 yields a mathematical projection of roughly $224,000. However, analysts note that the 2023-2024 rally was not driven exclusively by reverse repo drainage, as January 2024 spot Bitcoin ETF approvals and the April 2024 halving also contributed to market momentum.
Whether future market movements will reflect past patterns depends on the effectiveness and sustainability of Bessent's bond buyback initiatives.
