Bitcoin to $250,000 by Year-End as Fed Resumes QE, Says Hayes

In a recent essay published on March 31, former BitMEX CEO Arthur Hayes presented a compelling case for a $250,000 Bitcoin price target by the end of the year. His argument is grounded in the belief that the US Federal Reserve has effectively capitulated to fiscal dominance and resumed de facto quantitative easing (QE) for US Treasury markets.

Hayes' essay, which combines vivid satire with rigorous macroeconomic analysis, suggests that the Fed’s recent policy shift signals a structural return to fiat liquidity expansion. This environment, historically beneficial to Bitcoin and other hard assets, is expected to drive the price of Bitcoin higher. Hayes wrote, “Powell proved last week that fiscal dominance is alive and well. Therefore, I am confident QT, at least regarding treasuries, will stop in the short to medium term… Bitcoin will scream higher once this is formally announced.”

Hayes focuses on the Federal Reserve’s March FOMC meeting, where Chair Jerome Powell indicated that balance sheet reduction, or Quantitative Tightening (QT), would slow considerably. Powell stated that the Fed would look closely at letting mortgage-backed securities (MBS) roll off while keeping the overall balance sheet size constant. This policy configuration, dubbed “QT Twist” by Hayes, implies that the Fed will reinvest MBS runoff proceeds into US Treasuries, thereby supporting bond prices while holding the nominal balance sheet steady. Hayes characterizes this as “treasury QE,” even if not labeled as such.

Hayes calculated that if the Fed balance sheet is kept constant, they can buy a maximum of $35 billion per month of treasuries, or an annualized $420 billion. Additionally, the tapering of Treasury QT from $25 billion to $5 billion per month represents an annualized $240 billion positive shift in dollar liquidity. To illustrate the Fed’s political constraints, Hayes invoked a satirical dialogue where Powell is subjected to humiliation by Treasury Secretary Scott Bessent, underscoring the subordination of monetary policy to fiscal necessity. In this allegory, Powell is told by Bessent to start tapering QT for treasury bonds and announce that QE for treasury bonds will start in the near future.

Hayes reinforces his point by drawing historical parallels to Arthur Burns, Fed Chair during the inflationary 1970s, who admitted that political pressure rendered the Fed powerless to stop inflation. Burns wrote, “The Federal Reserve was itself caught up in the philosophic and political currents that were transforming American life and culture… Monetary policy came to be governed by the principle of under-nourishing the inflationary process while still accommodating a good part of the pressures in the marketplace.” Hayes sees the same dynamic today, intensified by the government’s ballooning debt burden and the need to finance deficits at low yields.

Hayes ties the Fed’s pivot to the political realities of a second Trump administration, particularly its industrial policy goals. Trump has pledged to reduce the US fiscal deficit from 7% to 3% of GDP by 2028, while reshoring manufacturing, sustaining military spending, and avoiding cuts to entitlements. However, Hayes argues that these objectives are mathematically incompatible without central bank support, given the scale of debt issuance required. “The maths don’t add up unless Bessent can find a buyer of treasuries at an uneconomically high price or low yield. Only US commercial banks and the Fed have the firepower to buy the debt at a level the government can afford.”

To unlock that capacity, Hayes anticipates the Fed will not only halt QT but also exempt banks from the Supplementary Leverage Ratio (SLR)—a key regulatory constraint limiting bank purchases of U.S. Treasuries. Bessent himself hinted at such a move, stating that removing the SLR could pull treasury bill yields down by 30 to 70 basis points, with every basis point representing a billion dollars a year. Hayes maintains that Bitcoin is uniquely positioned to benefit from this shift in monetary regime. Unlike equities, which are entangled in the legal and political architecture of the state, Bitcoin is a bearer instrument native to the digital realm, with no counterparty risk.

“Bitcoin trades solely based on the market expectation for the future supply of fiat,” Hayes wrote. “If my analysis… is correct, then Bitcoin hit a local low of $76,500 last month, and now we begin the ascent to $250,000 by year-end.” Referencing gold’s reaction to QE1 in 2008–2009, Hayes highlights how liquidity injections can lead to delayed but explosive repricing of anti-fiat assets. In his view, Bitcoin is now playing the same role gold once did—only faster and with more direct global exposure. Hayes also offered insight into Maelstrom’s capital deployment approach, stating that they use no leverage and buy in small clips relative to the size of their total portfolio. “We have been buying Bitcoin and shitcoins at all levels between $90,000 to $76,500.”