Arthur Hayes, Chief Investment Officer of Maelstrom and co-founder of BitMEX on Thursday said that foreign capital repatriation and the devaluation of U.S. Treasury bonds will be the twin forces driving Bitcoin (CRYPTO: BTC) to $1 million within the next presidential cycle.
What Happened: His thesis is rooted in structural imbalances in the U.S. trade and capital accounts and the political imperative to resolve them not through austerity, but through capital controls and money printing.
“Foreign capital repatriation and the devaluation of the gargantuan stock of U.S. treasuries will be the two catalysts that will power Bitcoin to $1 million sometime between now and 2028,” Hayes wrote.
The essay dissects the growing tension between the U.S.'s reliance on foreign capital to finance its deficits and the political unwillingness to pursue hardline trade protectionism.
Hayes argues that tariffs are an insufficient tool for rebalancing trade flows and are politically unsustainable in the short term, especially when they raise consumer prices.
Instead, he predicts a shift to capital controls, specifically targeting the foreign ownership of U.S. financial assets like stocks, bonds and real estate.
Hayes envisions a 2% annual tax on foreign-owned financial assets, which he believes could generate enough revenue to eliminate income taxes for most U.S. households.
"Trump could eliminate income taxes for the vast majority of voters by placing a 2% foreign capital tax on stocks, bonds, and property," he wrote.
This tax, he argues, would either discourage foreigners from accumulating U.S. assets, thus weakening the dollar and making U.S. exports more competitive, or allow capital inflows to continue while redistributing tax revenues domestically.
"Either foreign capital stays, pays the tax, and revenue is used to eliminate income taxes… or foreign capital leaves, and American manufacturing grows," Hayes explained.
But foreign capital fleeing U.S. assets would have systemic implications.
Hayes points out that the U.S. financial system is deeply reliant on steady demand for Treasury bonds, especially long-duration debt, and warns that a collapse in demand could trigger a surge in yields, destabilizing markets.
To counter this, Hayes predicts the Federal Reserve will resume quantitative easing (QE) and other expansionary measures to absorb the supply of Treasuries as foreign investors exit.
"Bond prices will rise and yields collapse. The Fed will buy bonds due to its QE policy," he wrote.
In his view, this renewed round of money printing will debase U.S. debt and fiat savings, driving investors toward hard assets.
Why It Matters: Hayes compares this to how U.S. Treasuries have already lost substantial purchasing power relative to Bitcoin and gold since 2021.
"Treasuries lost 64% and 84% of their value vs. gold and Bitcoin, respectively, from 2021 until the present," he stated, citing indexed ETF performance.
As the monetary system splinters under the weight of these imbalances, Hayes views Bitcoin as the only viable hedge for private capital.
Unlike gold, which often requires intermediaries and custody solutions susceptible to regulatory interference, Bitcoin is a bearer asset that can be transferred without institutional permission.
“Bitcoin is the perfect and only lifeboat for global capital that must leave America and elsewhere,” Hayes declared.
He contends that even if 10% of the $33 trillion in foreign-owned U.S. portfolio assets were to rotate into Bitcoin, the price would not merely rise linearly but potentially explode due to constrained supply and liquidity.
He envisions a potential "short squeeze of epic proportions" as traditional capital competes to enter the market.
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