Bitcoin may benefit if Fed expands FIMA, Hayes says

BitMEX co-founder Arthur Hayes said on Aug. 11 that a Federal Reserve facility increasingly discussed as part of Japan’s yen defense could eventually create a liquidity tailwind for Bitcoin, Ether and gold. Summary Hayes says expanded FIMA lending could strengthen yen while adding temporary dollar liquidity to markets. Japan officially plans to use FIMA after coordinating yen intervention with Washington on July 31. Federal Reserve rules currently cap FIMA exposure at $60 billion outstanding for each approved counterparty. Japan held $1.143 trillion in Treasuries in May, while GPIF owned roughly $232 billion separately. Bitcoin traded near $64,000 Tuesday, showing Hayes’s liquidity thesis has not produced immediate upside yet. In his latest essay, Hayes argued that Japan could pledge U.S. Treasuries through the Fed’s Foreign and International Monetary Authorities Repo Facility, receive dollars, then sell those dollars to buy yen. Unlike earlier versions of Hayes’s Japan thesis, part of the policy setup is now confirmed. Japan’s Ministry of Finance said it bought yen in coordination with the U.S. Treasury on July 31 and plans to use FIMA in the future. Treasury Secretary Scott Besse...