Arthur Hayes: ETH to Hit $10,000 This Year, Fed's Balance Sheet Expansion to Inject Liquidity into Crypto Market

BlockBeats News, September 3rd, BitMEX co-founder Arthur Hayes stated in a recent article that his current macro trade "North Star" is the Euro to Japanese Yen (EURJPY), with the exchange rate expected to drop from the current level of about 185 to 140 or lower by June next year. He believes that U.S. Treasury Secretary Scott Bessent is pushing for a weaker dollar against the yen, while also guiding policies to attract capital back to Japan and other Asian countries, putting pressure on European assets. Hayes noted that France is facing a high fiscal deficit, increasing government debt, and a reliance on foreign capital, making it the weakest link in the Eurozone, with French banks and the bond market potentially facing sustained outflow pressure.

Hayes further pointed out that Japanese companies are being urged to expedite the repatriation of overseas funds, which will strengthen the yen and may lead to Japanese and other Asian investors reducing their holdings of European assets. As French government and bank debts are being sold off, French banks, especially those deemed globally systemically important, may scale back their repurchase agreement (Repo) financing activities. Once French banks withdraw from part of the Repo market, it could raise the financing cost of U.S. government bonds, force hedge funds to deleverage, compel the New York Fed to expand repurchase market operations (RMP), and potentially accelerate the Federal Reserve's balance sheet expansion by almost $10 billion per month.

Hayes believes that these series of changes will eventually form a "tighten first, then loosen" liquidity chain: the decline of EURJPY will serve as a leading indicator of increased risk for French banks and imminent expansion of dollar liquidity; the Federal Reserve increasing dollar supply through RMP and FIMA repurchase mechanisms may further boost global fiat liquidity. He stated that the crypto market will be one of the fastest beneficiary assets of this liquidity expansion, and advised investors to consider buying EURJPY put options while maintaining a structural long position in Bitcoin. Hayes also reiterated his price targets by the end of 2026, expecting Ethereum (ETH) to reach $10,000, Ethena (ENA) to reach $0.5, and ETHFI to reach $2.