Arthur Hayes, the co-founder of BitMEX, has predicted that Bitcoin will climb once the U.S. government shutdown ends. His remarks, made on November 5, 2025, come as liquidity in U.S. dollar markets continues to tighten.
Hayes linked the crypto downturn since July to shrinking liquidity caused by the buildup of the Treasury General Account (TGA), arguing that its reversal will lift Bitcoin and Zcash prices.
Liquidity Drain Since U.S. Debt Ceiling Lifted
According to Hayes, since the U.S. raised its debt ceiling in July, Bitcoin has dropped by 5% while dollar liquidity has fallen by 8%. Data during that period shows the USD liquidity index declined from around 95 to nearly 91.88.
Bitcoin liquidity index, meanwhile, fluctuated sharply between 94 and 115, with peaks in mid-August and early October before sliding to 94.39 in early November. The correlation between falling liquidity and Bitcoin’s retreat shows tighter financial conditions.
Hayes attributed the contraction to a buildup in the TGA, which he said drained dollars from private markets. "TGA buildup sucked money out of the system," he wrote, adding that its unwinding after the shutdown will release liquidity and push Bitcoin higher.
He also highlighted Zcash (ZEC) as a potential outperformer once liquidity conditions ease. "When the U.S. government shutdown ends, the TGA will fall positive for dollar liquidity, and Bitcoin will rise… and ZEC will go up more," he stated on X.
Hayes’ Stealth QE Theory
Beyond short-term liquidity changes, Hayes laid out a broader thesis he calls “Stealth QE.” In his essay, Hallelujah, he argued that the next crypto rally will be led not by a formal return to quantitative easing but through the Federal Reserve’s Standing Repo Facility (SRF).
This facility, he said, allows the Fed to quietly inject liquidity into the banking system when funding stress arises. Hayes explained that U.S. fiscal deficits, estimated near $2 trillion, require constant Treasury issuance, which must be financed.
With foreign buyers and households purchasing fewer Treasuries, hedge funds have become major buyers using leverage through repo markets. "Cayman Islands hedge funds purchased about $1.2 trillion of Treasuries between January 2022 and December 2024," he cited from a Federal Reserve study.
These hedge funds rely on cheap, stable repo financing, which can only persist if the Fed ensures liquidity. Hayes noted that once repo rates exceed the upper bound of the Fed’s target range, the SRF provides emergency funding. "The Fed can supply an infinite amount of cash using its printing press at SRF as long as one provides collateral," he wrote.
From Fiscal Stress To Crypto Markets
Hayes connected the Fed’s liquidity backstop to the broader crypto market. He contends that when SRF usage increases, it effectively creates new money in the system, supporting asset prices, including Bitcoin. "If SRF balances are above zero, we know the Fed is cashing the checks of the politicians using printed money," he wrote, calling it stealth quantitative easing.
He added that the optics of traditional QE are now politically sensitive, making SRF operations a more discreet tool. "QE is a dirty word," Hayes remarked, suggesting the Fed will rely on repo lending rather than visible balance-sheet expansion. Despite its low profile, he argued, the effect on liquidity remains the same, boosting risk assets once SRF usage grows consistently.
At present, the Treasury General Account stands about $150 billion above its target level of $850 billion. Hayes said this excess will not return to markets until the government reopens, limiting liquidity in the meantime. Once fiscal spending resumes, he expects the added liquidity to revive crypto demand, setting up Bitcoin for recovery.
In his analysis, the current softness in the crypto market shows temporary liquidity withdrawal. Hayes maintains that when government spending restarts and SRF balances increase, dollar supply will expand again, supporting Bitcoin’s next upward leg.
Meanwhile, Bitcoin’s slide and the liquidity drop since July illustrate how funding constraints affect crypto markets. Hayes’ outlook connects fiscal deficits, repo dynamics, and the Fed’s backstops as the drivers of future liquidity cycles. His argument suggests that easing dollar strain after the U.S. shutdown could be the point where crypto momentum returns.