Arthur Hayes Predicts Fed Liquidity Shift Could Lift Bitcoin in 2026

BitMEX co-founder Arthur Hayes has shared a fresh outlook on Bitcoin’s future in a new essay titled “Frowny Cloud.” In the piece, Hayes explains why Bitcoin struggled in 2025. Additionally, why he believes 2026 could be a much better year.

His main point is simple: Bitcoin did not perform well last year because U.S. dollar liquidity was tight. Now, he expects that situation to change. If the Federal Reserve turns on the money tap again. Arthur Hayes believes Bitcoin could move much higher.

Why Bitcoin Struggled in 2025

According to Hayes, Bitcoin’s weak performance in 2025 had little to do with crypto itself. Instead, it was all about money flow. The U.S. Federal Reserve spent most of 2025 pulling money out of the system through quantitative tightening (QT). This means the Fed was shrinking its balance sheet and making credit harder to get. When dollars become scarce, risky assets usually suffer.

That is exactly what happened to Bitcoin. While gold surged due to heavy buying from governments and central banks and U.S. tech stocks rose on AI hype, Bitcoin moved sideways or lower. It ended 2025 around the $87K to $95K range, far below what many investors had hoped for. Arthur Hayes says this does not mean Bitcoin is broken. It simply means Bitcoin reacts strongly to changes in dollar liquidity.

Why 2026 Could Be Different

Looking ahead, Arthur Hayes expects the macro picture to flip. He believes U.S. dollar credit will expand again in 2026 through three main channels: First, the Federal Reserve could restart balance sheet growth, adding at least $40 billion per month back into the system. Second, banks may increase lending as financial conditions ease.

Third, the Fed could resume buying mortgage backed securities. It is possibly around $200 billion. Which would help lower mortgage rates and stimulate the economy. More money in the system usually means more demand for risk assets. Arthur Hayes believes this environment would support Bitcoin and other crypto assets. If this liquidity wave arrives, he thinks Bitcoin could push above $110,000 and possibly much higher if momentum builds.

Hayes’ Favorite Bitcoin Bets

Hayes is not just bullish on Bitcoin itself. He also likes stocks that act as leveraged Bitcoin plays. His top picks are MicroStrategy (MSTR) and Japan’s Metaplanet (3350). Both companies hold large Bitcoin treasuries and tend to move more than Bitcoin during rallies. When Bitcoin goes up, these stocks often rise faster. Arthur Hayes says they are his preferred way to bet on a Bitcoin breakout in early 2026.

What This Means for Investors

Arthur Hayes’ message is clear. Bitcoin follows liquidity. When dollars are tight, Bitcoin struggles. When dollars flow, Bitcoin flies. He believes 2025 was the “frowny cloud” year. 2026 could be the year the sun comes back out. Still, everything depends on what the Fed and banks actually do. Currently, the Bitcoin news concludes all eyes are on U.S. monetary policy because it may decide its next big move.