BitMEX co-founder Arthur Hayes has shared his thoughts on the potential implications of anticipated rate cuts by the United States Federal Reserve on the cryptocurrency market. Speaking in Singapore at Token2049, Hayes critiqued the Fed for contemplating rate cuts at a time of surging US dollar issuance and escalating government expense.
Hayes argued that, contrary to popular expectation, the envisaged rate cut could trigger a market collapse shortly after implementation rather than stimulate the stock market. He predicted that the upcoming cut would likely result in a reduction in the interest rate differential between the US dollar and the Japanese yen, contributing to a market downturn. Hayes drew references from a recent instance when the yen took a sharp nosedive, triggering near financial chaos.
Furthermore, Hayes compared the yields of Treasury bills (T-bills) and some cryptocurrencies. He observed that the returns on many cryptocurrencies were more or less comparable to T-bills, which poses the question of whether it’s worth investing in riskier cryptos when one could potentially earn similar returns from T-bills.
However, Hayes expressed his considerable investments in Ether, Ethena, and Pendle, highlighting his optimism about the Ether bull market. He described Ether as an ‘internet bond’ yielding 4%, although currently underperforming compared to T-bills. However, Hayes anticipates that a swift decline in the yield will bolster Ether’s financial standing, potentially triggering a resurgence in Ethereum’s bull market.