Arthur Hayes: Cryptocurrencies May Crash Within Days of First Fed Rate Cut, Era of Central Banks Is Over
The Federal Reserve is about to announce its first interest rate cut since 2020, but risky assets, including cryptocurrencies, could plummet within days of the cut, BitMEX co-founder Arthur Hayes said in an interview on the sidelines of the Token2049 conference in Singapore. Hayes argues that a rate cut would be a poor decision as inflation remains a problem in the US and lower borrowing costs would exacerbate inflation. In addition, a narrowing of the U.S.-Japan spread could lead to a sharp appreciation of the yen, triggering the unwinding of yen carry trades. Hayes expects U.S. interest rates to eventually fall to near-zero levels from the current 5.25%-5.5%. He agrees with Scottish market strategist Russel Napier that the era of central banking is over, with politicians taking over and instructing banks to create liquidity in specific areas of the economy. In this scenario, Hayes said, cryptocurrencies would be the only asset that would be globally portable and allow investors to get out of the system.
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