🗣️ Arthur Hayes’ new essay, “Same Same But Different”: Bessent repeats Yellen’s pattern – Bitcoin responds with a rise

The actions of the U.S. Treasury Department, led by Scott Bessent, are starting to resemble Janet Yellen's policy from late 2023, when an increase in short-term government bond issuance helped release about $2.4 trillion in liquidity. It was precisely this factor that supported the growth of Nasdaq and Bitcoin at the time.

Now, Bessent is trying to curb the rise in long-term Treasury yields by increasing the volume of reverse repurchase agreements. On August 19, the Treasury announced additional buybacks totaling approximately $20 billion, after which the yield on 10-year bonds briefly declined, and Bitcoin saw a noticeable rally. However, this volume is insufficient, and the market may force the Treasury to expand its support.

Three possible scenarios:

1. The Treasury and the White House cut spending—unlikely ahead of the election;
2. Bessent announces unlimited bond buybacks at yields above 5% (following the model of the Bank of Japan)—the best-case scenario for Bitcoin;
3. The most likely scenario is a gradual increase in buybacks combined with the use of other reserves, including the Treasury’s account at the Federal Reserve (TGA, around $1 trillion).

A direct interest rate cut or a new round of quantitative easing is unlikely until the AI infrastructure market bubble bursts.

Maelstrom’s position: The company holds maximum risk in its portfolio—betting on Bitcoin, Ether, Ethena, and Ether.fi.