In a recent interview, Arthur Hayes, renowned crypto investor and former CEO of BitMEX, shared his expert insights on the US Treasury’s latest borrowing maneuvers, the evolving liquidity landscape, and his investment outlook for crypto and traditional assets. Hayes’ nuanced perspective offers valuable guidance for investors navigating today’s complex macroeconomic environment.
US Treasury Borrowing: Behind the Headlines
Hayes began by dissecting the US Treasury’s recent borrowing estimate of over $391 billion. He cautioned that while official headlines suggest lower borrowing, the reality is more complex due to the ongoing debt ceiling. The Treasury is currently funding government operations by drawing down its general account and using “Extraordinary Measures,” rather than increasing net borrowing.
Hayes noted that when accounting for these factors, effective borrowing in Q1 2025 is actually 22% higher than the same period last year. He warned investors not to take headline figures at face value, as the true liquidity impact may be underappreciated by the market.
Treasury Buybacks and Market Liquidity
A key topic was the Treasury’s consideration of bond buybacks, highlighted by Treasury Secretary Scott Besant in a recent Bloomberg interview. Hayes explained that buybacks-where new bonds are issued to repurchase older ones-help improve market liquidity. This enables hedge funds and banks to leverage newer, more liquid bonds, supporting Treasury auctions and increasing the flow of dollars in the system.
Hayes believes this policy is positive for market liquidity and risk assets, including Bitcoin, which he expects to benefit as the government continues to borrow and inject dollars into the economy.
Crypto Market Outlook: Bitcoin, Altcoins, and Narratives
Bitcoin Dominance and Altcoin Rotation
Hayes revealed that from January to March 2025, he was underweight crypto, but is now fully invested, primarily in Bitcoin. He anticipates Bitcoin dominance rising to around 70%, after which a rotation into select high-quality altcoins may begin-potentially when Bitcoin surpasses $110,000 and trading volumes surge.
He does not expect a repeat of the wild 2021 “altseason.” Instead, Hayes predicts a more discerning market, with only projects demonstrating real traction, revenue, and user growth likely to outperform.
Top Picks: Pendle and EtherFi
Currently, Hayes is most bullish on Pendle (a leading DeFi fixed income protocol) and EtherFi (offering innovative crypto banking products like the EtherFi cash card). Both projects are profitable, have strong user bases, and show real-world utility-key factors in his investment decisions.
Meme Coins and AI Integration
Hayes remains cautious on meme coins, describing them as high-risk, speculative plays where most investors lose money. He is not currently invested in any, but remains open to trading them if compelling opportunities arise.
On AI, Hayes sees potential for agentic AIs to interact with DeFi, but stresses the need for near-perfect reliability before widespread adoption in financial applications.
Broader Market and Political Considerations
Hayes believes the crypto bull market has been ongoing since late 2022, despite periodic corrections. He avoids leverage, focusing on long-term macro trends over short-term volatility.
Regarding US politics, Hayes expects a potential Trump administration to be broadly positive for crypto, but cautions against unrealistic expectations or short-term speculation based on political headlines. He also notes that the US-China economic rebalancing is a structural trend that will persist regardless of political shifts.
Diversification: Gold and Traditional Assets
In addition to crypto, Hayes maintains significant exposure to physical gold and gold mining equities. He cites strong central bank demand and the potential for further price appreciation as reasons for his continued bullishness on gold.
Conclusion
Arthur Hayes’ analysis underscores the importance of looking beyond headlines, focusing on fundamentals, and maintaining diversification in today’s uncertain markets. As the interplay between fiscal policy, liquidity, and digital assets evolves, Hayes’ pragmatic and disciplined approach offers a valuable blueprint for investors seeking long-term success.
Key Takeaways:
- US Treasury’s real borrowing may be higher than official headlines suggest.
- Treasury buybacks are likely to boost market liquidity and support risk assets.
- Hayes is bullish on Bitcoin, with selective exposure to altcoins like Pendle and EtherFi.
- Meme coins remain highly speculative; AI integration in DeFi is promising but not yet mature.
- Diversification into gold remains a core part of Hayes’ portfolio.
Article based on an interview with Arthur Hayes, May 2025.
