Arthur Hayes, co-founder of BitMEX, recently shared his insights on potential impacts of U.S. Federal Reserve rate cuts during his keynote speech at Token2049 in Singapore.
Arthur Hayes, co-founder of BitMEX, recently shared his insights on potential impacts of U.S. Federal Reserve rate cuts during his keynote speech at Token2049 in Singapore.
With the Fed expected to announce its first rate cut in four years on September 18, Hayes cautioned that such a decision could lead to a significant market downturn.
He criticized the Fed's move to lower rates, arguing it represents a "colossal mistake" given the current environment of increased U.S. dollar issuance and government spending. Hayes stated, "While I think a lot of people are looking forward to a rate cut... I think the markets are going to collapse a few days after the Fed's rates."
According to Hayes, the anticipated rate cut, which he expects to range from 50 or 75 basis points, will likely drive a market drop by narrowing the interest rate differential between the U.S. dollar and the Japanese yen.
He referenced a recent decline of the yen, from 162 to around 142 over about 14 days, suggesting it caused "almost a mini financial collapse" and warned, "We're going to see a revisit of that financial stress."
Hayes anticipates the rate cut could diminish this interest rate gap, which he believes will have concerning implications for the markets.
In discussing crypto investments, Hayes highlighted the yields of Treasury Bills (T-bills) as a competing factor against digital assets. He noted that many crypto offer yields that are close to or below those of T-bills, prompting investors to consider safer options.
Hayes mentioned holding significant amounts of Ether, Ethena, and Pendle, while pointing out that Ether has underperformed compared to Bitcoin.
He described Ether as an "internet bond" with a yield of around 4%, which currently lags behind T-bills. Hayes believes that if yields decrease significantly, it could revitalize interest in Ethereum, potentially reigniting its bull market.
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