How Trump’s Fed Policies Could Propel Bitcoin to $3.4 Million, According to Arthur Hayes

Arthur Hayes, Co-founder and Chief Investment Officer of Maelstrom, has envisioned a bold future for Bitcoin (BTC), projecting its value to surge to an astonishing $3.4 million in the long term. Speaking at "Block Festa 2025," hosted in Samsung-dong, Gangnam, Seoul, Hayes attributed this potential rise to the Trump administration’s influence over Federal Reserve (Fed) policies, particularly in the areas of interest rate cuts and liquidity expansion. By establishing a favorable monetary environment, Hayes argues that such policies could amplify global credit growth, giving a significant boost to the digital asset market.

The Trump Administration’s Influence Over the Fed as a Catalyst

Hayes spotlighted the Trump administration’s increasing control over the Federal Reserve as a primary driver of Bitcoin’s potential upward trajectory. He highlighted that Trump has already appointed four of the seven sitting members of the Federal Reserve Board. Should Lisa Cook resign, as speculated, a majority of Trump-aligned policymakers would dominate the board.

Hayes explained that with this majority, the Federal Reserve could implement more aggressive strategies to lower interest rates and relax banking regulations. These measures, in turn, could encourage low-interest lending, driving higher production capacity within U.S. industries. Furthermore, Hayes suggested that a Trump-controlled Federal Open Market Committee (FOMC) might revisit tools from historical monetary policy, such as yield curve control (YCC), used during the 1950s. This mechanism involves the Fed and the U.S. Treasury directly managing long-term bond yields to achieve financial and economic objectives.

Policy Implications: Liquidity Expansion and Economic Growth

Hayes detailed how Trump’s Fed Board, with majority backing, could exert substantial influence over FOMC decision-making. According to Hayes, one significant move might involve lowering the Interest on Reserve Balances (IORB) below the federal funds rate. This would incentivize banks to borrow at lower rates, engaging in low-risk arbitrage through the Fed’s discount window. In such a scenario, the FOMC would likely respond by reducing the benchmark interest rate to sustain balance within the financial system.

Another potential strategy under a Trump-dominated Fed is the use of the System Open Market Account (SOMA). Through SOMA, the Fed could purchase Treasury securities and maintain interest rates at specific targets. This approach of yield curve control would mirror quantitative easing measures but with a populist twist, which Hayes referred to as “QE 4 Poor People.” By stabilizing rates and enhancing credit availability, such initiatives could bring about a reindustrialization wave in America, boosting domestic manufacturing and economic productivity.

How Bitcoin Could Thrive Amid Credit Expansion

The macroeconomic impact of these policies could extend significantly to the digital asset market, Hayes asserted. He believes that the anticipated surge in money supply and credit availability would create tailwinds for Bitcoin and other digital assets. This trend, coupled with growing institutional and retail adoption, could drive Bitcoin to unprecedented heights. Hayes forecasted exponential growth for the digital asset market through 2028, with Bitcoin potentially achieving a valuation exceeding $3.4 million in the long term.

The reasoning behind this projection stems from Bitcoin’s unique properties as a deflationary asset immune to central bank manipulation. In an environment where traditional currencies face devaluation due to an escalating money supply, Bitcoin could emerge as an appealing store of value. As such, Hayes suggested that the convergence of expanded credit and liquidity, paired with Bitcoin’s intrinsic scarcity, makes it a prime beneficiary of emerging macroeconomic trends.

The Role of South Korea in the Crypto Economy’s Growth

Hayes also identified South Korea as a high-potential market for cryptocurrencies and blockchain technology. He proposed that regulatory reforms in the country, such as authorizing the issuance of stablecoins pegged to the Korean won, could enhance access for foreign investors and bolster market activity. In addition, aligning financial leverage rights for derivatives with global standards could attract greater institutional capital into South Korea’s domestic crypto exchanges.

By creating a more favorable regulatory landscape, Hayes suggested that South Korea could further integrate with the global digital asset ecosystem, amplifying its role as an innovation hub in the blockchain industry.

Conclusion: The Transformative Impact of Monetary Policy on Bitcoin

Arthur Hayes’ insights underscore the interconnectedness between macroeconomic policies and the digital asset market. By aligning Bitcoin’s long-term growth potential with structural changes in monetary strategy—such as those spearheaded by a Trump-influenced Federal Reserve—he paints a transformative picture of how digital assets might react to global liquidity expansion. While bold, Hayes’ forecast for Bitcoin’s future value highlights the evolving dynamics between traditional financial systems and decentralized cryptocurrencies.

Whether or not Bitcoin will reach $3.4 million remains speculative, but the underlying factors—credit growth, liquidity surges, and regulatory shifts—offer valuable food for thought. As central banks navigate increasingly complex economic conditions, the ripple effects on digital currencies will undoubtedly remain a focal point for analysts, policymakers, and investors worldwide.