How dollar liquidity expansion drives Bitcoin higher: Hayes's 2026 forecast

Arthur Hayes’s latest prediction has attracted attention: as the Federal Reserve’s balance sheet expands, bank loans increase, and mortgage rates decline, dollar liquidity will further grow, which will become the core driver pushing Bitcoin higher. Behind this view, the co-founder of BitMEX reflects the deep interconnection between traditional financial policies and crypto assets.

Three Drivers of Dollar Liquidity Expansion

Hayes’s forecast is based on three specific policy changes:

• Federal Reserve Balance Sheet Expansion: A direct manifestation of the central bank increasing the money supply
• Increase in Bank Loans: Financial institutions releasing more liquidity into the market
• Decline in Mortgage Rates: Lower financing costs stimulate economic activity

These three factors collectively point to the same outcome: abundant dollar liquidity in the market. In such an environment, investors tend to seek high-yield assets, and Bitcoin, as a risk asset, often benefits during periods of liquidity glut.

The Relationship Between Liquidity and Bitcoin

Why does liquidity expansion benefit Bitcoin?

Ample dollar liquidity means investors have sufficient funds, and risk appetite rises. At this stage, institutional and individual investors shift from low-yield assets (like bonds) to high-risk, high-reward assets. Bitcoin is a typical representative of such assets. Additionally, abundant liquidity also elevates overall asset prices, creating a “price increase effect.”

Current Market Performance of Bitcoin

According to the latest data, Bitcoin’s current price is $95,763, with recent performance remaining steady:

Market capitalization reaches $1.91 trillion, accounting for 58.98% of the entire cryptocurrency market. This stable and sustained upward trend is a practical reflection of Hayes’s viewpoint.

Hayes’s Investment Moves Confirm His View

From related news, Hayes’s recent investment strategies align closely with his dollar liquidity forecast. He states that the core trading strategy this quarter is to go long on MSTR (MicroStrategy) and Metaplanet, both of which hold large amounts of Bitcoin to bet on BTC appreciation. The logic is clear: if liquidity expansion drives BTC higher, then the stocks of these Bitcoin-centric companies will also benefit.

Additionally, Hayes is actively positioning in tokens like ENA, HYPE, which he considers high-growth assets. This comprehensive investment approach indicates his strong confidence in abundant market liquidity through 2026.

How Should the Market Interpret This Expectation?

Credibility of the View

As co-founder of BitMEX, Hayes holds significant influence and voice in the crypto market. His predictions are often based on macroeconomic analysis rather than short-term technical factors, making his perspective relatively objective. However, it remains a personal opinion, and the market’s ultimate direction still depends on actual policy implementation.

Risks to Watch

The Federal Reserve’s actual policy depends on economic data and inflation trends. If economic conditions change, liquidity policies may be adjusted. Moreover, geopolitical factors and regulatory policies could also impact Bitcoin’s performance.

Summary

Hayes’s prediction points to a clear logical chain: dollar liquidity expansion → increased demand for risk assets → Bitcoin rising. This macro framework has been validated multiple times in history. The current steady rise of Bitcoin and Hayes’s proactive positioning support this outlook. However, investors should understand that this is a policy-based forecast, and actual results will need time to verify. The key is to continuously monitor Federal Reserve policy developments and actual liquidity changes, which will be important references for judging Bitcoin’s future trajectory.