Arthur Hayes names the next bull market catalysts: increasing debt and money supply

Arthur Hayes has released a new essay titled “Hallelujah,” and he opens with “Praise be to Lord Satoshi that time and compounding interest exist.” He sets the tone quickly: governments spend more than they collect, and they do it because taxes are hated and reelection is ￰0￱ lays out a simple point. A government can pay with savings or with ￰1￱ means ￰2￱ piss people ￰3￱ politicians ￰4￱ borrow now, leave the bill for later, and hope they’re gone before the fallout ￰5￱ then asks how the buyers of ￰6￱ debt pay for these ￰7￱ they use their own saved money or do they borrow to buy them? This matters because if the main buyers borrow the money to buy the debt, and the lenders create that money from nothing, then government borrowing directly increases the money ￰8￱ if the money supply grows, then dollar liquidity grows, which affects Bitcoin and the rest of ￰9￱ explains who buys ￰10￱ Arthur says to answer the debt question, start with whether the ￰11￱ will cut ￰12￱ says the answer is no, pointing out that Trump and Team Red already extended the 2017 tax ￰13￱ the second question: Is the Treasury borrowing to fund the deficit now and continuing in the future?

He says ￰14￱ show around $2 trillion in deficits funded by $2 trillion in borrowing each ￰15￱ the yearly deficit equals the yearly debt ￰16￱ moves on to who buys that ￰17￱ central banks are not the key buyers ￰18￱ says after the ￰19￱ Russia’s reserves in 2022, central banks realized their money could be taken whenever it was politically ￰20￱ instead of U. S. debt, they are choosing ￰21￱ shift began when Russia invaded Ukraine and gold demand spiked. Next, the ￰22￱ sector does not have enough savings to fund the ￰23￱ ￰24￱ savings rate in 2024 was 4.6%, but the deficit was 6% of ￰25￱ gap means the private sector cannot be the marginal ￰26￱ banks are not the answer ￰27￱ four largest banks bought around $300 billion in 2025, but the Treasury issued about $1.992 ￰28￱ they don’t fill the ￰29￱ buyers are Relative Value (RV) hedge funds based in places like the Cayman Islands.

A Fed paper confirmed they absorbed $1.2 trillion in ￰30￱ between 2022 and ￰31￱ was 37% of net ￰32￱ do this through a trade: buy cash treasuries and sell ￰33￱ profits are tiny, so the only way to make real money is to borrow to finance the ￰34￱ details how the financing works RV funds finance the purchases using repo, where they pledge the treasuries to borrow cash ￰35￱ cash is used to settle the ￰36￱ interest rate in repo tracks SOFR, the rate the Fed tries to guide between the Upper Fed Funds and Lower Fed ￰37￱ Fed controls this through tools: RRP pays the lower bound to money market ￰38￱ pays commercial banks a rate in the ￰39￱ is the emergency ￰40￱ lends cash at the upper bound when liquidity is ￰41￱ cash is scarce, SOFR ￰42￱ it rises above the upper bound, the entire leveraged system risks ￰43￱ funds cannot fund their ￰44￱ auctions ￰45￱ the Fed steps in through the SRF, which is effectively printing money in exchange for ￰46￱ calls this Stealth ￰47￱ is not ￰48￱ is not labeled ￰49￱ it creates dollars just the ￰50￱ as treasury issuance keeps rising, $2 trillion for deficits and more to roll old debt, SRF usage will keep ￰51￱ SRF balances rise, the global dollar supply expands, and that is fuel for the next Bitcoin bull ￰52￱ that liquidity returns, the market may feel ￰53￱ says the government shutdown delays spending, which drains ￰54￱ Treasury General Account is about $150 billion above its $850 billion target, which holds money out of ￰55￱ helps explain current crypto ￰56￱ Arthur says the four-year Bitcoin cycle is lining ￰57￱ will panic and ￰58￱ after altcoin ￰59￱ says that would be a ￰60￱ liquidity mechanics do not ￰61￱ $50 free to trade crypto when you sign up to Bybit now