Arthur Hayes has a message for crypto investors and bitcoin (BTC) HODLers obsessing over Federal Reserve policy as the U.S. and China inch toward a trade deal: You’re watching the wrong institution.

“The real show is at the Treasury Department. Ignore the Fed. It doesn’t matter,” Hayes told CoinDesk in a recent interview. “Powell didn’t matter in 2022 under a Democratic regime, and he doesn’t matter now under a Republican one.”

For Hayes, the Federal Reserve has become a sideshow. The real monetary lever-pulling, he argues, is happening under Treasury Secretary Scott Bessent, who is quietly reshaping global liquidity with buybacks and auction strategies designed to manage a ballooning U.S. debt load.

That flood of liquidity, paired with America’s inability to rein in spending, is why Hayes says Bitcoin is heading to $1 million by 2028.

“All we care about is whether there are more dollars in the system today than yesterday,” Hayes said. “That’s all that matters.”

But monetary policy isn’t the only catalyst in his view. Hayes sees geopolitics fueling the fire too, particularly the performative trade diplomacy between the U.S. and China. As both sides posture, Hayes says they’ll likely sign a deal that looks bold on paper but changes nothing of substance.

“It’s going to be a deal on the surface,” he said. “Trump needs to prove he’s been tough on China. Xi needs to prove that he stood up to the white man.”

After all, China has proven with its Covid-era policies it can withstand more economic pain. With tariffs politically risky, Hayes thinks the next move will be taxing foreign investment, a quiet form of capital control meant to reduce America’s dependence on foreign buyers without spooking domestic voters. This is how you get the American people to swallow a realignment of trade.

“The only real policy that actually works is capital controls,” he said.

Potentially, there are multiple tools on the table. Not just taxes on foreign-held Treasuries or equities, but more aggressive ideas like forced bond swaps, trading 10-year notes for 100-year paper, or higher withholding taxes on capital gains from U.S. assets.

It’s all part of a strategy to rebalance the financial account without forcing Americans to “buy less stuff,” a message he says no politician can sell.

“Americans don’t like to do hard things,” he added. “They don’t want to be told that you have to consume less.”

China will continue to pile on into U.S. assets

China, meanwhile, isn’t going anywhere. Hayes says it has no choice but to keep buying U.S. assets even if it pretends otherwise.

“They have to obfuscate kind of how much stuff they’re buying off of America… but mathematically, they just can’t stop.”

For Hayes, this all leads to one place: more money sloshing through the system, and bitcoin soaking up the spillover.

His portfolio reflects that thesis: 60 to 65 percent in bitcoin, 20 percent in ether (ETH), and the rest in what he calls “quality shitcoins.”

Why? Because the market is finally looking for coins that actually work.

“We are in fundamentals season. people are tired of coins that don’t do anything,” Hayes said.