Arthur Hayes, the co-founder of the crypto exchange BitMEX, has predicted that Bitcoin could surge to a staggering $3.4 million per coin by 2028, contingent on the U.S. Federal Reserve (Fed) implementing a monetary policy known as yield curve control (YCC). Hayes's analysis, outlined in recent essays, links this extreme price target to a potential massive credit expansion that would result from such a policy shift.
Yield curve control is a monetary policy strategy where a central bank targets specific yields or interest rates on government bonds. Rather than focusing on the quantity of bonds it purchases, as in quantitative easing (QE), the central bank commits to buying whatever amount of bonds is necessary to hold yields at a predetermined level. This approach was used by the United States during World War II to cheaply finance the war effort by keeping government borrowing costs low.
According to Hayes, the Fed's adoption of YCC could unleash over $15 trillion in new credit by 2028. This massive injection of liquidity into the financial system would devalue fiat currencies, like the U.S. dollar, prompting investors to seek alternative stores of value. Hayes argues that Bitcoin, with its fixed supply of 21 million coins, is uniquely positioned to benefit from such a scenario. Its scarcity makes it an attractive hedge against inflation and currency debasement.
Hayes's model is based on the relationship observed between credit expansion and Bitcoin's price during the COVID-19 pandemic. He calculated that the slope of Bitcoin's price increase was ~0.19 for every dollar of credit growth. Extrapolating this to a potential $15.2 trillion credit boom led to his theoretical $3.4 million target. However, Hayes himself clarified that the figure is more "directional" than absolute, stressing that the overall trend of money printing favors scarce digital assets. "My goal is to get the direction of travel correct and be confident that I'm betting on the fastest horse," he stated.
The discussion around YCC arises as central banks look for additional tools to manage economies, especially when short-term interest rates are near zero. YCC can complement other policies like quantitative easing and forward guidance by providing more certainty over long-term interest rates. While critics have questioned liquidity-driven arguments, Hayes remains confident that Bitcoin will outperform traditional assets during periods of monetary expansion, serving as a key hedge against dollar debasement.