"Time Signature" – Arthur Hayes's New Essay (Brief Summary)

Former BitMEX CEO Arthur Hayes has published a new essay titled “Time Signature.” In this piece, Hayes draws an analogy between dancing to a beat and timing the markets, arguing that catching the right “rhythm” is crucial for investors. He emphasizes that the pace of fiat money creation sets the tempo for asset prices particularly cryptocurrencies and predicts a major crypto rally as monetary policy shifts. Below is a brief summary of Hayes’s key points and insights:

• Fiat Liquidity Sets the Beat: Hayes asserts that the most important variable for profitable trading is understanding changes in fiat supply. A surge in money printing (liquidity) provides the “beat” that drives up Bitcoin and other crypto prices.
• Return of Quantitative Easing: The essay envisions U.S. Federal Reserve Chair Jerome Powell coming under pressure from fiscal authorities to reverse tightening and restart quantitative easing (QE). Hayes argues this policy U-turn – effectively subordinating the Fed to Treasury needs (a scenario of “fiscal dominance”) – will flood markets with dollars, creating ideal conditions for a crypto bull run.
• Bold Price Predictions: Considering the expected liquidity surge, Hayes predicts Bitcoin could reach $250,000 by the end of 2025, with Ethereum potentially hitting $10,000. He believes the recent macroeconomic environment – despite war tensions and tariffs – has not derailed crypto’s upward trajectory and that abundant liquidity will fuel explosive growth.
• “QE for the Poor” via War Spending: Hayes discusses how U.S. President Trump’s policies (e.g. war-time industrial policy and infrastructure deals) amount to “QE for poor people” – government-guaranteed profits for critical industries that spur bank lending. Massive fiscal spending on wars and strategic projects effectively forces credit creation even without formal QE, pumping more money into the system.
• Stablecoins Bridging Debt and Crypto: As government deficits swell under these policies, Hayes notes a curious link to crypto: stablecoin issuers will finance a chunk of the debt. When crypto markets grow, more capital flows into stablecoins, which invest reserves in U.S. Treasury bills. Hayes argues that a booming crypto market (aided by new liquidity) means stablecoin treasuries buying more T-bills, indirectly funding government spending – a symbiosis that didn’t exist in past cycles.
• Trading Strategy – Go Long: In light of this outlook, Hayes’s strategy is to position for a major rally. He suggests that once the Fed pivots back to easing, the crypto bear phase is over and “the low is in.” His fund has been accumulating Bitcoin and altcoins without leverage, and will accelerate buying as his thesis plays out. He’d confidently bet that Bitcoin is headed upward (citing $110k as a nearer-term milestone) rather than revisiting last cycle’s lows.

Dancing to the Market’s Rhythm

Hayes begins by recounting his college days in a ballroom dancing club – where success depended on finding the time signature of the music and staying on beat. In trading, he compares this to identifying the financial market’s “kick drum”: the core driver that dictates price momentum. For crypto, this core rhythm is set by the rate of fiat money expansion, since Bitcoin’s supply is fixed. When governments print large amounts of money (as after 2008 or during COVID), it chases a relatively scarce asset like Bitcoin, driving its price up dramatically. In Hayes’s words, the faster the fiat supply grows, the faster Bitcoin’s price ascends.

At present, he observes a confusing mix of signals – geopolitical conflicts (trade tariffs, wars) that create noise and “dissonance” in the financial melody. Despite these negative factors, markets have been grinding higher, which Hayes interprets as evidence that the underlying liquidity conditions remain favorable. He cautions investors not to get “out of time” with the market by overreacting to news like war or tariffs, if those events don’t ultimately dampen the credit expansion “beat.” In his view, the credit cycle is the drumbeat to monitor, and it’s still pumping liquidity (the U.S. “credit kick drum continues to demarcate time and tempo” despite headline risks).

War Spending and “QE for Poor People”

Hayes delves into fiscal policy, particularly under a Trump administration, to illustrate how governments may unwittingly turbocharge liquidity. He notes that historically, wars are stimulative for economies (via a Keynesian lens) – government orders for weapons replace weak consumer demand, and banks eagerly lend to defense contractors knowing profits are backed by the state. This shift toward what he calls “state-sponsored capitalism” (or even “fascist” economics) means the U.S. is moving to an industrial policy where critical industries (like arms manufacturing or strategic minerals) receive government guarantees.

In Hayes’s view, Trump is a “wartime president” who will put the U.S. on a war footing economically. The essay cites the example of the MP Materials deal – where the U.S. Department of Defense became a major shareholder in a rare-earth mining company and guaranteed a floor price for its product. Big banks promptly offered $1B in loans to MP Materials with minimal hesitation, since the government guarantee made the credit nearly risk-free. This is emblematic of “QE for the poor” (as Hayes terms it): instead of the central bank buying assets (QE for rich asset-holders), the government ensures profit for certain sectors, causing banks to create new loans (i.e. new money) for those sectors. The result is a “credit geyser” of new dollars entering the economy.

Crucially, Hayes points out, this credit-driven stimulus still leads to more money chasing assets, including crypto. He argues that as deficits rise to fund war and industrial projects, someone must buy the deluge of new Treasury bills – and that’s where stablecoin issuers come in. Today, a significant portion of any increase in crypto market cap ends up in dollar stablecoins, which then invest in T-bills. Hayes notes that for roughly every $1 increase in total crypto market value, about $0.09 flows into stablecoins that will purchase Treasuries. If crypto’s market cap grows to, say, $100 trillion by 2028 (a scenario Hayes entertains), stablecoin issuers could amass $9 trillion in T-bills, becoming major financiers of the U.S. debt. This creates a feedback loop: profligate government spending and debt issuance -> more money in circulation -> higher crypto prices -> more stablecoin reserves to buy government debt. Hayes likens USDT and other stablecoins to a blockchain-based SWIFT, aggregating liquidity globally and greasing the wheels of both crypto and government finance.

Powell’s Surrender and Market Outlook

In the scenario Hayes paints, Fed Chair Jerome Powell ultimately “gives up” the inflation fight due to mounting fiscal pressures. Hayes references history (like World War II) when the Fed was effectively subordinate to the Treasury – and suggests we are returning to such an environment of overt fiscal dominance. At a March 2025 meeting (in Hayes’s hypothetical narrative), Powell is told by the Treasury that interest rates must be kept low and QE restarted to finance deficits. Indeed, Hayes expects that by summer 2025 the Fed will announce a resumption of QE, irrespective of lingering inflation. This policy reversal – from quantitative tightening to easing – is the moment he’s positioning for.

Once the central bank opens the liquidity taps, Hayes argues, risk assets will soar. He explicitly forecasts that with QE back, “the $76,500 low is in the past” for Bitcoin and a move to $250k is plausible within the year. He even states he’d bet Bitcoin hits $110k before it ever drops back to $76k. Such bold predictions come with a caveat – “predictions in this market are hard to call accurate” – but Hayes is clearly skewed bullish given the macro setup. His trading plan reflects this: Hayes’s fund (Maelstrom) has been buying BTC and altcoins at levels between $76k and $90k, in small increments and with no leverage. They intend to speed up purchases if events confirm his thesis (e.g. announcements of policy easing). Hayes maintains that with Powell effectively reined in by fiscal needs and the Fed poised to “flood the market with dollars,” one should be long hard assets and crypto.

In summary, “Time Signature” delivers an upbeat message for crypto believers. Hayes marries a colorful metaphor (dancing in time with the market’s beat) to a robust macro argument: that a combination of war-driven fiscal expansion and an inevitable Fed capitulation will unleash a wave of liquidity. This, in turn, could make 2025 a year of unprecedented price highs for Bitcoin and Ethereum. He urges readers to tune out distracting noises (geopolitics that don’t halt money creation) and keep their ears on the money supply “music.” If Hayes is right, the coming policy crescendo will see trillions of new dollars chasing crypto – and those who position accordingly, he believes, will waltz their way to substantial gains