Hayes' New Theory: How Trump's Easing of Policies Could Trigger the 2026 Bitcoin Rebound

Arthur Hayes’ latest article, “Frowny Cloud,” presents an interesting perspective: by 2025, Bitcoin’s performance will underperform gold, not due to technical or market issues, but because of liquidity problems. More importantly, he predicts that in 2026, dollar liquidity will expand significantly, which will serve as the trigger for a strong rebound in Bitcoin.

The “Liquidity Story” of 2025

Why Bitcoin underperforms compared to gold

According to Hayes’ analysis, Bitcoin’s sluggish performance in 2025 is entirely driven by liquidity. He believes that Bitcoin declines alongside dollar liquidity, whereas gold and the Nasdaq index can rise against the trend because they are supported by stronger non-liquidity-driven factors—namely, the de-dollarization trend and AI quasi-nationalization.

In other words, Bitcoin is a liquidity indicator. When dollar liquidity contracts, it is the first to be affected. Gold, as a traditional safe-haven asset, and tech stocks represented by the Nasdaq, have their own fundamentals that help resist liquidity pressures.

Current data shows that BTC has risen 5.37% over the past 7 days and 11.63% over the past 30 days, with a market share of 58.98%. This indicates that the market is gradually restoring confidence in Bitcoin.

Policy Expectations and Rebound Logic in 2026

Trump’s “Liquidity Injection” Plan

Hayes’ core judgment is: in 2026, Trump will aggressively push for credit expansion to make the economy “red hot.” Why? Because in November this year, midterm elections are coming up, and a super-hot economy will help the Republicans secure re-election.

This is not mere speculation but based on specific policy pathways:

• The Federal Reserve’s balance sheet will expand again, effectively restarting money printing
• Commercial banks will significantly increase lending to “strategic industries”
• Mortgage rates will decline due to money printing

Together, these channels imply a substantial expansion of dollar liquidity.

Why Bitcoin will rebound strongly

Following Hayes’ logical chain: liquidity expansion → dollar depreciation → rise in risk assets → Bitcoin, as a liquidity-sensitive asset, will rebound strongly.

The key here is “strongly.” Hayes emphasizes that when liquidity truly arrives, Bitcoin’s rebound will not be mild but “very strong.” This is based on a simple fact: if dollar liquidity expands significantly as expected in 2026, Bitcoin, as a liquidity indicator, will inevitably experience a corresponding catch-up rally.

Market Status and Expectation Gap

Currently, BTC is trading around $95,763. Although it has recently risen, the overall performance since the beginning of the year suggests that the market has not fully priced in the liquidity expansion expected in 2026. This means there is still considerable room for growth if Hayes’ predictions come true.

It is also noteworthy that Hayes’ own trading actions are validating his views. According to the latest information, he has recently been actively positioning in leveraged assets like MSTR and Metaplanet, betting on Bitcoin’s strength, which aligns with his expectation of a Bitcoin rebound in 2026.

Summary

Hayes’ analytical framework is quite clear: Bitcoin’s “bear market” in 2025 is a liquidity story, and its rebound in 2026 is also a liquidity story. The difference is that the former involves contraction, while the latter involves expansion.

The key points to watch are: first, whether the Federal Reserve and government will indeed loosen monetary policy as expected; second, whether the market has fully priced in this expectation. If both conditions are met, Bitcoin’s rebound potential may be much larger than what current prices reflect. This also explains why Hayes emphasizes at this moment that “when the rebound happens, it will be very strong”—he is betting on the realization of this policy expectation.