Potential $10.1 trillion market boost could incite a long-term rally in assets.
Arthur Hayes, founder of Maelstrom, recently shared insights on potential market movements ahead of the Jackson Hole economic symposium in August. He highlighted the possibility of the Treasury General Account’s refill, reaching $486 billion, tightening dollar liquidity, potentially pulling Bitcoin $109,549 to the $90,000 – $95,000 range. For short-term risk management, Maelstrom has decided to close its illiquid altcoin positions and may also reduce its Bitcoin holdings. In the medium term, with the introduction of stablecoins by major banks and a potential return of $10.1 trillion in purchasing power to the markets, asset prices could rise.
ContentsShort-Term Liquidity Pressure on CryptocurrenciesTrillion-Dollar Potential Awaits Short-Term Liquidity Pressure on Cryptocurrencies
In his Medium article, Hayes evaluates that following the increase in the debt ceiling, the Treasury General Account’s completion to $850 billion will temporarily reduce the circulating dollar. He warns of a potential pullback of Bitcoin after its current peak tests, seeking support in the $90,000 to $95,000 range. However, the symposium might light up recovery as of early September if Fed Chair Jerome Powell hints at easing quantitative tightening.
Hayes explained that Maelstrom will hold a “substantial” position in staked USDe (Ethena USD) during July-August, serving as a hedge against volatility. Accordingly, the company has sold all illiquid altcoins, which provided 2-4x returns since April. Hayes emphasized that until a clear liquidity catalyst emerges for the markets, Maelstrom could gradually lessen its Bitcoin risk.
Trillion-Dollar Potential Awaits
Hayes associates U.S. Treasury Secretary Scott Bessent’s support for stablecoin regulation with the need to control borrowing costs. This regulation allows numerous and substantial too-big-to-fail (TBTF) banks to issue stablecoins, directing deposits amounting to $6.8 trillion toward treasury securities. Complementary to this is the waiver of the Supplementary Leverage Ratio (SLR), allowing these assets to be held with almost infinite leverage.
According to the Maelstrom founder, the removal of interest payments by the Fed on bank reserves could generate an additional $3.3 trillion in demand. He regards the total potential of $10.1 trillion as a new version of the “Activist Treasury Issuance” model proven successful since 2022. Furthermore, Hayes emphasized how the “Genius Act” limiting FinTech issuers gave TBTF banks an unrivaled space, citing JP Morgan’s JPMD stablecoin as an indicator of this strategy. He believes this mechanism could ignite a long-term rally in stocks, bonds, and especially Bitcoin, extending until 2026.
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