Arthur Hayes was interviewed on The Rollup podcast, discussing the global macro environment and the outlook for the cryptocurrency market.

Compiled by: Wu Says Blockchain

On September 8, 2026, Maelstrom's Chief Investment Officer Arthur Hayes was interviewed on The Rollup podcast, discussing the global macro environment and the outlook for the cryptocurrency market. He believes that Japan's gradual lifting of large-scale yen arbitrage trading, coupled with rising risks in the French bond market, may force the Federal Reserve to accelerate the creation of dollar liquidity, with the euro to yen exchange rate being an important leading indicator for observing this change. Hayes also talked about the unit economics of the AI industry, potential rescue measures that governments may take and their impact on fiat currency devaluation trades, and introduced Maelstrom's current market allocation, explaining why Ethereum is a significant position in their response to the current liquidity cycle.

Editor's Note: Arthur Hayes is known for his clear views and willingness to make predictions, yet his market forecasts often change, and he himself has admitted numerous times that his predictions have a high failure rate. Therefore, readers should not regard his specific price targets, timelines, or trading actions as investment advice. Rather than the outcomes of his predictions, Hayes' writings are more valuable for their analytical framework and thought process about the relationships among global liquidity, monetary policy, fiscal systems, and the cryptocurrency market. Wu Says reprints his articles mainly to provide readers with a reference perspective for observing macro and crypto markets.

The statements made by guests do not represent Wu Says' views and do not constitute any investment advice. Please strictly adhere to local laws and regulations. The audio transcription and translation were completed by GPT and may contain errors.

Japan's Capital Repatriation Could Become the Catalyst for a New Rally in the Cryptocurrency Market

Host: Arthur, it's great to invite you again. Welcome to the bull market. The on-chain market is heating up, mainstream coins are rising, but institutional players and people from the AI circle seem to still be on the sidelines. I was at Jackson Hole last week attending the Federal Reserve meeting. Kevin Warsh mentioned at the start of his speech that he had hiked in Jackson Hole twice, one time very hard, one time very easy; this week, the market responded very strongly. What is the current state of the macro environment? Both Scott Bessent and Warsh are taking action, what do you think?

Arthur Hayes: First, Warsh is not important, what he says doesn't matter. He gave that speech about two weeks ago, but I think the really important things are happening recently. I wrote an entire article on this, which is my current focus.

In modern global financial markets, Japan is often associated with various important changes. Around mid to late July, Japan's Finance Minister Shunichi Suzuki stated that domestic institutions need to reassess asset allocation standards, reducing holdings of foreign assets and increasing investments in domestic Japanese assets. She was actually referring to the Government Pension Investment Fund (GPIF). GPIF is Japan's largest pension fund and has quasi-government characteristics. At that time, the USD/JPY was around 160 to 163.

Everyone might agree with this direction, but the question is whether the government will take measures to push it to actually happen. The last major adjustment to GPIF's asset allocation was after 2012, after which individuals and corporations followed this change. At that time, Shinzo Abe implemented Abenomics, stimulating the economy through monetary easing, hoping GPIF would increase its allocation to foreign securities and decrease its allocation to domestic securities. It took him two years to get GPIF to formally agree, which involved replacing opponents and appointing supporters of this direction. After that, GPIF released a framework to increase foreign assets and reduce domestic assets, the market started, the USD/JPY increased, the yen weakened, and Japanese investors began investing overseas, with others following suit.

Thus, I initially thought that GPIF might not start selling U.S. Treasury bonds and buying Japanese government bonds for another two to three years; this wasn't something that required immediate attention. But then came the first yen intervention: Bessent sold euros and bought yen and suggested removing the single counterparty limit for the Federal Reserve's FIMA Repo Facility. He was essentially pressuring Warsh to fulfill his duties and remove this cap. This means that institutions like GPIF do not need to sell U.S. Treasury bonds; rather, they can use U.S. Treasury bonds as collateral to obtain dollar loans from the Federal Reserve and then sell dollars on the forex market, buy yen, and finally bring the funds back to Japan.

This is only a part of the puzzle because Warsh still needs to convene the relevant financial subcommittee, and the committee needs to agree to this. Subsequently, the U.S. Treasury proposed increasing the scale of bond buybacks by $20 billion, but given the bond market size of about $40 trillion, this isn't much. Last week or earlier this week, Bessent stated that the Bank of Japan needs to raise interest rates faster. Similar remarks have been made before, but the key remains his preparedness to take action.

This week, there's also the G20 meeting. I think some agreement may have been reached outside of the meeting, and the Japanese side finally received the message. Bloomberg reported that GPIF held an unscheduled meeting in August. August is Japan's holiday month, so it is unusual to hold an unscheduled meeting at this time. We don't know what was discussed in the meeting, but previously the Japanese government requested that they increase their allocation to Japanese assets, and Bessent also urged Japan to increase domestic assets and sell off U.S. assets. After that, the USD/JPY fell from 160 to 155 in one trading day, while the euro to yen rate also dropped by about 3 yen during the Asian trading session, which is significant volatility.

I think an announcement may come soon: either the limit for the FIMA Repo Facility cap will be raised, or GPIF has begun adjusting the weight of domestic versus foreign assets in its allocations. The crypto markets and other markets reacted overnight. Meanwhile, Waller stated that inflation does not seem that severe, and the Federal Reserve may not need to raise interest rates. Considering these things together, the goal is to weaken the dollar and strengthen the yen. This has been one of the primary objectives of the Trump administration; they wanted to reshape global trade architecture.

To achieve this, the yen must appreciate. The yen may be the most undervalued currency globally, except for the renminbi. The U.S. finds it difficult to take the same actions against China, but it can influence Japan since Japan relies on U.S. security. I believe this is why the crypto market is rising. The market had been processing various information, and now a substantive change has finally occurred. Without explicit news, the USD/JPY fell from 160 to 155, indicating something has changed.

Therefore, I believe the rally has commenced. Crypto assets and other assets surged overnight, while the S&P index remained roughly flat or declined, tech stocks and AI trades did not show significant gains, indicating the liquidity logic behind it. In the coming days or weeks, there may be more information disclosed proving that an agreement indeed was reached during the G20 meeting, along with corresponding arrangements to create dollar liquidity, suppress the dollar, and boost the yen.

Japan Inc. is Reversing the World’s Largest Yen Arbitrage Trade

Host: Weakening the dollar means enhancing our assets. You didn’t discuss yen arbitrage trading in detail in your latest article. When people think of Japan and the yen, they often think of arbitrage trading or basis trading. Does this relate to the logic you just described? If so, what impact will it have?

Arthur Hayes: I refer to Japanese society as "Japan Inc.," which operates the world's largest yen arbitrage trade. If you observe Japan's consolidated balance sheet, including private sector assets, you will find that Japan has effectively been printing yen and purchasing foreign assets.

With the yen depreciating and assets such as U.S. tech stocks held by Japan increasing, Japan's overall performance has been quite good. Some focus solely on the debt-to-GDP ratio and similar metrics, but Japan should be viewed as a whole. Although Japan claims to be a capitalist society, it has strong community and socialist characteristics; capitalism is more of an external form. Ultimately, there exists a "Japan Inc." in which yen arbitrage is a nationwide transaction, and Japan is the largest participant in this trade.

When GPIF is prompted to shift, "Japan Inc." will act accordingly: selling foreign bonds and equities, selling foreign currencies, buying yen, bringing funds back domestic, and investing in Japanese government bonds, local enterprises, and real estate. This is precisely the directive issued by the government. It will take some time to kickstart, but once it begins, it shouldn't be opposed.

The issue for the United States is that Japan has held these assets for the past 30 years, boosting the U.S. market. When the entire U.S. system relies on gains from rising stock prices and ongoing debt issuance, how should this trade exit? The only way for the U.S. to respond would be to print money, taking over the trades Japan has conducted previously.

Japan's past strategy has been that it doesn't matter if the USD/JPY rises to 200, as long as it can re-inflate the domestic economy and escape the issues left by the real estate bubble of the 1980s through inflation. The U.S. is currently employing a similar strategy: even if the dollar index drops to 50, as long as it can regain its status as an industrial heavyweight and reduce its debt-to-GDP ratio from about 100% back to around 30% (like it did after previous strategies), it is acceptable. The essence of both is the same. It takes a long time to form, but once it starts, it is challenging to move against the trend.

The Fed's Monetary Policy is No Longer Truly Restrictive

Host: Warsh discussed the deflationary effects of AI and innovative technologies at Jackson Hole, and then expressed concerns about inflation at the end of his speech. The changes you describe seem to mark the beginning of a broader rotation. Post-pandemic, U.S. financial policy has been extremely loose; the last four years have seen higher interest rates, while quantitative tightening ended about six months ago, and the Fed's balance sheet has stabilized and started to rise since then. Do you think U.S. financial policy is transitioning from a restrictive environment into a more accommodative and supportive phase?

Arthur Hayes: The only truly restrictive period for the U.S. monetary environment was from December 2021 to October 2023. After that, Janet Yellen began issuing more short-term Treasuries and withdrew $2.5 trillion from the reverse repo facility. For holders of crypto assets and other assets, the market has re-entered a bullish phase since that time.

As you mentioned, AI trading is their "Get Out of Jail Free Card." The U.S. has printed a lot of money over the past fifty or sixty years. According to normal mathematical logic, the cost of interest and the scale of debt grow exponentially, making it nearly impossible to solve solely through economic growth. But now there's something new called AI. The narrative is that as long as AI is developed and the U.S. wins the AI competition against China, the debt problem will vanish, and productivity will significantly increase.

This is why Warsh, Trump, Bessent, and everyone else are talking about AI. It's the only way they can explain to voters that they don't need to worry about how much the government is spending or the fact that government expenditure as a percentage of GDP is higher than ever outside of war or pandemic times, because the U.S. has AI and will win the AI competition. But these people may not even know what AI specifically means; they just accepted the narrative sold to them by Dario, Sam, and Elon.

AI will also integrate into the same transaction. If AI is the only reason the government uses to explain how to resolve the deficit problem and why there’s no concern about expenditure, then once large AI labs come under pressure because their unit economic models do not hold up, what will the government do? It will bail out these companies, and the form of that bailout will be to inject more funds.

Therefore, issues related to Japan's trade framework and Europe will prompt the U.S. to create more money; AI provides the government with a reason to save face. The government has already wasted trillions of dollars on these hallucinatory chatbots, which will also be the reason for continuing to inject a large amount of money into the market. Combined, these two aspects will help crypto assets reach new highs.

AI Capital Misallocation Will Ultimately Benefit Bitcoin and Gold

Host: Over the past 6 to 18 months, the logic of fiat currency devaluation trades via bitcoin seems to have broken down; bitcoin has not performed well, but gold has risen, and tech stocks have significantly outperformed the market, with strong performances in sectors like AI capital expenditures and storage. Will the shift you described lead gold, bitcoin, and other fiat devaluation trade assets to benefit more than pure tech assets?

Arthur Hayes: Yes, I believe this change is starting now. A friend just sent me the latest cover of The Economist, which features Nvidia CEO Jensen Huang portrayed as a magical wizard, as if Nvidia had no cash flow problems, cyclical financing, supplier financing, or accounting tricks like "Enron 2.0"; it simply added an AI chatbot, making it the best company of all time. I think this is a signal of a market top. When The Economist tells you one thing, you should go in the opposite direction because their judgment is very foolish.

The current situation is very favorable for bitcoin and gold because politicians cannot stop spending. Otherwise, they would need to admit the huge mistakes made previously, including issues surrounding data centers, social media, and the use of user data by tech companies. If the government acknowledges problems in the AI direction and changes policy, it will have to withdraw support for the industry, letting people like Elon bear their own capital costs, no longer providing special regulatory arrangements, and no longer seeking more investments for loss-making enterprises under a nationalist narrative of U.S.-China competition.

At that point, companies will either make money or not. Companies like Anthropic should also be revealing true profits, not just revenue figures; if they keep burning cash, they should explain the unit economics of their reasoning business. Potential IPO or secondary market investors need to see this information.

But this scenario clearly will not happen because politics does not operate that way. This is precisely why bitcoin, gold, and other similar assets will perform well: we have entered a phase of capital waste. The government will produce大量新创造的资金，为这些贷款续期，以掩盖此前的错误，因为它无法承认自己浪费了巨额资金。

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