BitMEX co-founder Arthur Hayes has revealed significant investments in Ethereum (ETH), Ethena (ENA), and Pendle (PENDLE), while expressing optimism about the next Ethereum bull market. Speaking at Token2049 in Singapore, Hayes shared insights on how potential interest rate cuts by the U.S. Federal Reserve could impact the crypto market.
During his keynote speech, titled “Thoughts on Macroeconomics Current Events,” Hayes compared holding Treasury Bills (T-bills) yielding 5% to investing in cryptocurrencies. He argued that the Federal Reserve’s expected rate cut on September 18, its first in four years, could have significant repercussions.
Hayes criticized the Fed for contemplating rate cuts while the U.S. government continues to issue large amounts of dollars and increase spending. “The Fed is making a colossal mistake,” Hayes warned.
He believes the cuts will eventually lead to a market collapse, despite initial optimism. According to him, a reduction of 50 to 75 basis points will likely result in a market downturn due to narrowing the interest rate gap between the U.S. dollar and the Japanese yen.
The former BitMEX executive noted that the U.S. dollar-yen relationship is crucial, referencing a recent financial shock when the yen’s value dropped significantly, causing financial stress. He predicted a similar scenario if the Fed proceeds with its rate cuts.
Hayes also explained the impact of T-bill yields on cryptocurrencies. With Treasury Bill yields hovering around 5.5%, many investors find them more appealing than riskier decentralized finance (DeFi) projects. However, Hayes remains bullish on Ethereum, describing it as an “internet bond” yielding 4%. He anticipates that a sharp drop in interest rates could reignite an Ethereum bull market.
As rates decline, Ethereum becomes money, Hayes said. “We could reignite the Ethereum bull market.”
Hayes’ bullish outlook on Ethereum comes despite its recent underperformance compared to Bitcoin. Nonetheless, he remains confident that market conditions will eventually favor ETH, especially with the Fed’s upcoming rate decision.
