The pressure is mounting on US Treasury Secretary Scott Bessent as the 10-year yield flirts with the critical 5% threshold, a macro-level constraint that is forcing a rethink of liquidity management strategies. This, in turn, is sparking deep speculation about the potential trajectory of global risk assets, particularly the cryptocurrency market.

The narrative opens on a symbolic night at the refurbished Brooklyn club, now known as New York's Pacha, a venue seen as the heart of American hegemonic power. The elite gather here, swaying to the beats of Keinemusik. The protagonist, nicknamed "Buffalo Bill," Scott Bessent, heads straight for a private booth behind the DJ console in the VIP area, musing about the crowd's dancing skills. Meanwhile, Citadel's Kenny G is celebrating his victory over Leopold Aschenbrenner, a high-leverage San Francisco trader. Bessent notices the beautiful woman next to Kenny G is Leopold's wife, and the satisfaction of humiliating a rival brings him some balance. However, his composure is shaken when he sees his predecessor, former Treasury Secretary Janet Yellen, sitting with Hunter Biden, who waves at him. Feeling a pang of resentment and wondering how she can afford a $20,000 booth, Bessent realizes the lucrative potential of government service. Yellen, across the noisy room, mocks Bessent's recent market troubles, imitating former Vice President Kamala Harris's laugh and calling him a puppet of Trump. She then lets loose, her male companion sporting a diamond dog collar from Jacob the Jeweler, whispering Cardi B lyrics while holding a Reta. Furious, Bessent walks past the booth of Arthur and Ansem, a group of crypto gamblers in loud discussion. Arthur beckons to Bessent, saying the crypto community supports him, urging him to keep printing money, warning that a market crash would strip the rich of their gains, leave the ordinary with nothing, and potentially invite higher taxes from AOC. In that moment, Bessent resolves to be a Treasury Secretary who does his utmost, and if Trump needs ten trillion to prop up the market, he will do whatever it takes.

Shifting to the macro-logic, despite their pre-office rhetoric, Janet Yellen and Scott Bessent are fundamentally the same. Both are constrained by spendthrift politicians but believe the price of holding the nation's top financial power is worth it. Whenever the bond market experiences severe turbulence, they deploy sophisticated money-printing strategies. When the Treasury prints money to lower bond yields, it injects dollar liquidity into the market, which eventually flows into Bitcoin and the crypto market. Hayes draws a comparison between two historical periods: late 2023, when Yellen flooded the market with short-term T-bills to reduce long-term bond supply, and the present, with Bessent intervening in the USD/JPY exchange rate and expanding bond repurchase programs. In both instances, Bitcoin rebounded strongly from its lows. Both Yellen and Bessent are deeply fearful of the 10-year yield approaching 5%, as it's the most critical pricing anchor in the American financial order, influencing 30-year fixed-rate mortgages, corporate debt, and consumer credit. A break above 5% would make borrowing costs prohibitive for households and businesses, cooling economic activity, which is why regulators fight so hard to defend this level.

Examining Yellen's late-2023 playbook reveals a sophisticated, indirect money-printing operation. With voters focused on the cost of living, the Biden team knew that outright rate cuts or balance sheet expansion would stoke inflation fears ahead of the 2024 election. Yellen devised a clever method to provide liquidity without the appearance of overt money printing. At the time, around $2.5 trillion was parked in the reverse repurchase (RRP) facility, funds sitting on the Fed's balance sheet, unable to be rehypothecated by banks to create credit, resulting in a zero money multiplier. However, if money market funds (MMFs) shifted their capital from the RRP into higher-yielding short-term T-bills, the banking system could then rehypothecate those assets. Liquidity would flood the bond market, lowering yields and pushing up stock prices, creating the bottom for Bitcoin after the FTX collapse. Since T-bills have maturities under a year, they offer MMFs better liquidity and appeal, as their yields must be slightly higher than the RRP rate to compensate for policy risk. Theoretically, lending to the US government in dollars is risk-free, but in reality, debt repayment requires congressional approval, and the debt ceiling drama keeps markets on edge. Investors are wary of holding securities with uncertain redemption timelines. So, Yellen increased the supply of T-bills, causing their prices to fall and yields to rise significantly above RRP rates, enticing profit-seeking MMFs to migrate their funds and complete the liquidity release. This transmission mechanism is clearly validated by data. When Bessent took office on 2025-01-20, the RRP balance had shrunk from $2.5 trillion to $100 billion, representing a $2.4 trillion liquidity injection sourced from pandemic stimulus funds. This massive influx drove the Nasdaq 100 and Bitcoin higher, and the 10-year yield quickly retreated from the dangerous 5% level, all while the federal funds rate remained unchanged around 5.3%. This phenomenon explains why Bitcoin and risk assets rallied even as the Fed maintained its highest rates since 2008 and shrank its balance sheet. The academic term for Yellen's maneuver is ATI-Activist Treasury Issuance, or proactive Treasury debt issuance. The root of market optimism is this shift in liquidity structure, and crypto traders who fail to grasp this logic will miss the next bull run.

Bessent currently faces a predicament identical to Yellen's, with his boss eager to spend lavishly on items like Middle East wars. While the spending purpose doesn't matter, the Treasury Secretary's job is to borrow money for the government at an affordable cost. Short-term T-bills are the highest-yielding, safest cash-equivalent instruments in the dollar system, desirable to everyone, including the stablecoin derivatives like USDT and USDC held by the crypto community. Bessent knows the market can absorb massive amounts of T-bills, but the problem is their one-year maturity. The higher their proportion, the faster the debt compounds. Every week, the Treasury must issue more debt to cover new spending and repay old debt, accelerating the growth of total US debt. By increasing the T-bill share, Bessent can leverage the most important marginal buyer: the Federal Reserve. Currently, the Fed creates bank reserves through its Reserve Management Plan (RMP), printing money to buy short-term T-bills. The monthly purchase size is determined by New York Fed President Williams, who leans dovish. If Williams judges that dollar liquidity is scarce, he can order traders to create reserves and buy T-bills in the open market, essentially the Fed printing money to pay politicians' bills. With the Fed as a buyer, Bessent can issue large amounts of short-term debt, using the proceeds to buy back longer-term bonds and manipulate the yield curve at will. Looking back at recent policy actions, Bessent hinted at the powerful weapon of bond buybacks after the "Liberation Day" incident. Trump initially wanted to use aggressive tariffs to reshape global trade but backed down after the market crashed. Bessent warned the market not to test his policy tools. Over a year later, Bessent acted, announcing large-scale buybacks to force down long-end yields. On August 19, without prior notice, he announced an additional $20 billion in long-end bond buybacks for the next fiscal quarter. The 10-year yield dipped briefly, and Bitcoin rallied strongly for two consecutive days. However, just one trading day later, the 10-year yield rose back above pre-announcement levels, explaining Bessent's somber mood at the party. First, a $20 billion buyback is a drop in the bucket compared to the $40 trillion total debt. Second, the market sensed panic signals; weeks earlier, Bessent had proposed removing the cap on the FIMA facility, allowing Japan and other major US debt holders to use their Treasuries as collateral to borrow dollars directly from the Fed, rather than selling bonds in the open market and crashing prices. Finally, the market believes that pushing the 10-year yield higher will force Bessent to replicate Yellen's approach and inject trillions of dollars of liquidity into the market. On a psychological level, Bitcoin acts as a smoke alarm for global liquidity, keenly detecting these signals. If Bessent is an upgraded Yellen, Bitcoin could embark on a violent bull run from its lows.

Several paths could unfold from here. For an asset as sensitive to dollar liquidity as Bitcoin, the worst-case scenario would be Trump and his team choosing to cut fiscal spending, but with elections approaching, this is highly unlikely. Setting aside doomsday scenarios, Bessent has multiple tools to start the money-printing machine. The best-case scenario for Bitcoin is Bessent emulating the Bank of Japan's bond market intervention, announcing an unlimited bond purchase program if yields on 10-year or longer maturities exceed 5%. Initially, long-bond prices would surge, yields would fall sharply, and the market would temporarily respect Bessent. But all interventions that defy market economics eventually face a test, and the market would probe whether Bessent is truly willing to fire the dollar cannon. The most likely middle path is that, unless the MOVE volatility index breaks above 130, indicating acute market stress, Bessent will incrementally increase buybacks while exploring other unconventional tools to release liquidity indirectly. One obvious method is drawing down the Treasury General Account (TGA) to fund buybacks, a proposal Bessent has leaked to CNBC, with roughly $1 trillion currently held in the TGA. Hayes believes that unless the AI credit bubble truly bursts in the coming years, it will be politically difficult for the Fed to cut rates directly or restart unlimited QE. Voters remain focused on the cost of living, and even teenagers scrolling short videos understand that rate cuts and QE equal money printing. Therefore, whether Bessent moves fast or slow, Bitcoin will continue to rise, albeit with increased volatility and brutal short-term pullbacks even in an upward trend. Based on this analysis, the investment strategy is clear: unless you're a full-time trader, avoid leverage. Buy Bitcoin or your preferred altcoins and hold them patiently, waiting for Bessent's policies to take effect. At Maelstrom, the fund has adopted a fully invested risk-asset strategy, with core positions in Bitcoin, Ether, Ethena, and Ether.fi, anticipating a strong rally. This is another classic case of fiscal policy driving crypto asset appreciation following Yellen's liquidity restructuring, and market participants must closely monitor the coordinated actions of the Treasury and the Fed.