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Arthur Hayes predicts crypto crash before Ethereum rebound

Arthur Hayes predicts crypto crash before Ethereum rebound

GrafaGrafa2024/09/18 11:25
By:Liezl Gambe

BitMEX co-founder Arthur Hayes recently shared his insights at Token2049 in Singapore, warning of a potential market downturn following anticipated interest rate cuts by the United States Federal Reserve.

Speaking on Sept. 18, Hayes suggested that the Federal Reserve’s decision to cut rates may lead to a significant market decline in the short term.

During his keynote speech, Hayes criticised the Fed’s move to cut rates amidst increasing U.S. government spending and dollar issuance, calling it a “colossal mistake.”

He expressed concern that many investors are optimistic about the rate cuts, hoping for a stock market surge, but Hayes believes the cuts could trigger a collapse shortly after the announcement.

He predicted the rate cut could be between 50 and 75 basis points, narrowing the interest rate differential between the U.S. dollar and the Japanese yen, which might replicate recent financial stresses seen in the market.

Hayes also discussed the comparison between Treasury Bills (T-bills) and crypto investments, noting that T-bills currently offer a 5.5% yield, making them more attractive than some cryptocurrency investments.

He pointed out that yields on digital assets like Ether (CRYPTO:ETH), Ethena (CRYPTO:ENA), and Pendle (CRYPTO:PENDLE) are either close to or below T-bill returns.

Despite this, Hayes remains confident in his crypto holdings, especially in Ether, which he refers to as an "internet bond" yielding around 4%.

Hayes predicts that if interest rates drop quickly, Ethereum could see renewed bullish momentum.

He stated, "If the yield drops quickly, which I believe it will, then Ethereum becomes money, and I’m earning more."

Hayes expects the Federal Reserve’s continued rate cuts will lead to further market instability, but also create conditions for a potential Ethereum bull run.

At the time of reporting, the Ethereum (ETH) price was $2,315.37.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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