TLDR
- The US and Japan are working together to strengthen the yen by using a Fed facility called FIMA to print dollars and buy yen
- The Bank of Japan cannot raise rates aggressively without crashing bond markets and triggering a global carry trade unwind
- Japan’s giant pension fund GPIF may be forced to sell US stocks and bonds and bring money home, threatening US markets
- If the Fed expands the FIMA program, it would grow the Fed’s balance sheet, which has historically driven Bitcoin prices higher
- Arthur Hayes is bullish on Bitcoin, Ether, and Ethena (ENA) as the top plays if dollar liquidity surges
The US and Japan appear to be working together to push the yen higher. US Treasury Secretary Scott Bessent has publicly called for expanding a Federal Reserve program that could allow Japan to swap its US Treasury holdings for dollars, then use those dollars to buy yen in currency markets.
Arthur Hayes: Fed-Backed Yen Rescue Could Fuel Bitcoin, Gold and Ether
BitMEX co-founder Arthur Hayes said the most likely path to a stronger yen is not aggressive Bank of Japan rate hikes or large-scale Treasury sales, but Japan using the Federal Reserve’s FIMA repo facility to… pic.twitter.com/tT0XDjjflH
— Wu Blockchain (@WuBlockchain) August 11, 2026
The program in question is the FIMA Repo Facility. Right now, it caps each counterparty at $60 billion in outstanding loans. Bessent wants that cap removed and the list of eligible counterparties expanded to include large Japanese institutions like the Government Pension Investment Fund, known as GPIF.
Why the Yen Got So Weak
The yen’s long slide started with Abenomics in 2012. Former Prime Minister Shinzo Abe pushed the Bank of Japan to print unlimited amounts of yen to buy government bonds, a policy called yield curve control. The goal was to weaken the yen and boost exports.
It worked. The yen lost more than half its value over the following decade. That cheap yen became the world’s go-to funding currency. Investors borrowed in yen, bought higher-yielding assets in dollars and euros, and pocketed the difference.
What Happens If FIMA Is Expanded
If the Fed’s Foreign Currency Subcommittee, which includes Fed Chair Kevin Warsh, removes the FIMA cap, Japan could repo up to $1.37 trillion in US Treasuries. That includes $1.14 trillion held by the Japanese government and $230 billion held by GPIF.
The Fed would print dollars to fund those loans. That would grow the Fed’s balance sheet. Historically, Bitcoin’s price has moved closely with Fed balance sheet expansion.
Hayes is betting this happens. He says Warsh, like his predecessors, will follow political direction from the Trump administration.
Japan cannot easily take the other routes to a stronger yen. Raising rates aggressively would crater the value of Japanese government bonds the BOJ already holds, causing massive unrealized losses. In July 2024, a surprise BOJ rate hike sent the yen from 160 to 140 in days, and the Nasdaq and Nikkei both dropped more than 10%. The BOJ quickly backed off.
The second option, having Japan Inc. sell US stocks and bonds to repatriate yen, is also off the table for now. Japan depends on American military support, and a mass selloff of US assets would damage the Treasury and stock markets that fund Pax Americana.
So FIMA expansion is the path of least resistance.
Crypto Plays
Hayes says Bitcoin is already a core position. For the next leg up, he points to Ether as a large-cap option, calling it the one major crypto that did not hit a new all-time high in 2025.
He also highlights Ethena, ticker ENA, as a higher-risk pick. ENA is down more than 90% from its highs. Its stablecoin USDe has seen supply fall 75% as Bitcoin basis yields dropped. Hayes says even a small recovery in Bitcoin price could boost USDe yields and drive fresh inflows, potentially sending ENA up 5x.
Hayes has not yet moved fully into these positions and is waiting for the FIMA rule change to be formally announced.
