Trump’s Economic Strategy: Arthur Hayes Analyzes How Debt, the Federal Reserve, and DOGE Can Propel Bitcoin to Reach $1 Million

Simply Put: Trump’s Financial Operating Model
In response to the economic policies of the Trump administration, the market and media often fall into emotional reactions. However, to truly understand Trump’s economic strategy, one should adhere to the “KISS principle” (Keep It Simple, Stupid).
Arthur Hayes, the founder of BitMEX, points out in his latest article that Trump’s core financial philosophy is not complicated: it revolves around driving the “America First” policy through massive borrowing and low-interest financing. His governing style mirrors his real estate business model: utilizing leverage to raise funds and attracting market attention with exaggerated visions. This strategy applies to real estate and is equally relevant to national economic governance.
Investors in the market, influenced by the media’s depiction of “daily drama,” may lose their long-term investment perspective due to short-term fluctuations. However, the real factors influencing market direction lie in the monetary policy of the Federal Reserve (Fed) and the U.S. Treasury, rather than Trump’s statements in news headlines.

Trump’s Power Struggle with the Federal Reserve
The success of Trump’s economic policies depends on the coordination between the U.S. Treasury and the Federal Reserve. However, these two institutions currently exhibit a divergence of power.
Treasury Secretary Scott Bessent, a staunch supporter appointed under Trump 2.0, aligns with Trump on economic direction, advocating for reshaping the U.S. financial situation through measures such as extending the maturity of national debt. Conversely, Fed Chairman Jerome Powell, although appointed during Trump 1.0, later came to be viewed as a “traitor” after he significantly lowered interest rates by 0.5% before the 2024 election to assist the then-Democratic administration in stabilizing the economy. Following the election, Powell reiterated his commitment to combating inflation, which contradicts Trump’s goal of expanding fiscal spending through low interest rates.
To promote economic growth, Trump must persuade or force Powell to lower interest rates and increase the money supply. However, due to the Treasury and the Fed “alleging allegiance to different factions,” this power struggle will determine the future direction of the U.S. economy.

How to Force the Federal Reserve to Lower Interest Rates? The Strategy of Economic Recession
Historically, whenever the U.S. economy shows signs of recession, the Federal Reserve typically lowers interest rates and increases the money supply to prevent market collapse. Therefore, if Trump wants to push the Fed to lower interest rates, one possible strategy is to create signs of economic slowdown.

Department of Government Efficiency (DOGE) and Cuts to Federal Spending
The Trump administration has launched the “Department of Government Efficiency” (DOGE), led by Elon Musk, tasked with cutting government spending, combating fiscal waste, and reorganizing the public sector. The core objectives of this initiative include:
– Identifying financial loopholes and fraudulent activities within the federal government, with estimated funds involved potentially reaching hundreds of billions of dollars annually.
– Reducing federal government personnel, with a projected cut of 400,000 government employees by 2025.
– Decreasing government spending to lessen market dependence on government funds, thereby influencing overall economic activity.
The impact of this initiative has already begun to manifest, with housing prices in Washington D.C. dropping by 11% since early 2025, a decrease in business for federal contractors, and an expanding wave of layoffs. The market has started to worry about whether a “recession” is imminent, and as economic downward pressure intensifies, the Fed will find it challenging to maintain its current tightening policy, ultimately being forced to lower interest rates.

Potential Scale of Monetary Easing by the Federal Reserve
If Trump successfully compels Powell to yield, the Federal Reserve may take the following actions:
– Lower interest rates to 0%, equivalent to a quantitative easing (QE) scale of $1.7 trillion.
– Terminate quantitative tightening (QT), releasing approximately $540 billion in market liquidity.
– Restart QE or relax the bank leverage ratio (SLR), potentially releasing an additional $500 billion to $1 trillion.
This means that, in the most extreme scenario, the market could see an influx of $2.74 trillion to $3.24 trillion in new liquidity, approaching the $4 trillion in money printing during the COVID-19 period.
Historical data shows that between 2020 and 2022, the Fed and the Treasury printed $4 trillion, leading Bitcoin’s price to soar from $4,000 to $69,000 (a 24-fold increase). If Trump’s economic plan facilitates a similar influx of funds, Bitcoin’s price could witness a tenfold increase again, surpassing the $1 million mark.

Reality of Bitcoin Strategic Reserves: Insufficient Funds
Recently, Trump reiterated that his administration would establish a “Bitcoin Strategic Reserve,” prompting strong reactions in the market. However, the issue lies in the fact that the U.S. government currently lacks ready funds to purchase Bitcoin unless Congress agrees to raise the debt ceiling or reassess the value of gold reserves. Therefore, while this policy direction may influence market sentiment, actual purchasing actions may take some time to materialize.
(BitMEX founder Arthur Hayes: The U.S. government has no money to buy Bitcoin; promoting cryptocurrency reserves is merely “empty talk.”)

Market Trends and the Future of Bitcoin: Focus on Monetary Policy
Recently, Bitcoin’s price has dropped from $110,000 to $78,000, a decline of 30%, indicating market concerns about tightening liquidity. However, once the Fed shifts towards monetary easing, Bitcoin will become one of the first assets to benefit.
In the midst of market volatility, short-term traders may miss opportunities due to emotional influences, but long-term investors should focus on the direction of U.S. monetary policy rather than short-term political upheavals. As Trump’s policies gradually take shape, the coming months will determine whether Bitcoin will enter a new bull market.
As political turmoil becomes the norm, market investors should return to fundamentals, concentrating on trends in money supply and interest rates to gain an advantage in this economic chess game.

Risk Warning
Investing in cryptocurrencies carries a high level of risk, and their prices may fluctuate dramatically. You may lose your entire principal. Please assess risks carefully.