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Arthur Hayes Predicts Crypto Crash from Fed Interest Rate Cuts

Published

3 months ago

September 18, 2024

Crypto billionaire Arthur Hayes on Wednesday said Fed interest rate cuts will crash Bitcoin and the crypto market. The comments came at the major crypto event Token2049. The US Federal Reserve is expected to cut rates between 25-50 bps, with markets expecting a 50 bps cut amid slowing inflation and the labor market.

Arthur Hayes Says Fed Rate Cut Will Crash Crypto Market

During a speech at the Token2049 event on September 18, BitMEX co-founder Arthur Hayes talked about the macroeconomic trends such as Fed rate cuts and its impact on the crypto market.

He believes the US Federal Reserve’s interest rate cut can crash markets, including Bitcoin price and crypto market. He added that there’s a 60-70% odds of a 50 bps rate cut, but it will be a big mistake by the Fed under current conditions. According to CME FedWatch tool, there’s a 65% probability of a 50 bps rate cut after the FOMC meeting today.

Arthur Hayes asserts the markets will collapse within a few days as it will narrow the interest rate gap between the US dollar and the Japanese yen. The unwinding of Yen carry trades by hedge funds and big investors almost triggered a small financial crisis as Bank of Japan hiked interest rates.

CoinGape Media also provided a similar outlook as Hayes. The report revealed that economists expect a rate hike by BOJ as early as October. It will threaten the market rally sentiment due to rising volatility and uncertainty.

Invest in Treasury Bills And Ethereum

Arthur Hayes said he has enjoyed a return of around 5.5% from Treasury bills for more than a year after the Fed stopped raising interest rates. While assets having yield less than Treasury bills have failed to attract investors. He claims this is the reason why ETH price has remained low. There are several other factors driving Ethereum price rally.

The US dollar index (DXY) fell to a low of 100.74 today. The US 10-year Treasury yield held around 3.64%, hovering near 15-month lows as investors braced for the upcoming Federal Reserve monetary policy decision.

However, Ethereum will become more attractive if Treasuries fall after Fed rate cuts, which he things to happen. Hayes recommends buying Ethereum, Pendle, Ethena’s USDe and other similar products with stable yield.

“You need to buy treasury bonds, we will buy them, put them in some legal structure, and then give you a certificate that pays interest.”

Recently, Arthur Hayes correctly crypto market recovery after BTC price crash. He closed his short position on Bitcoin after Treasury Secretary Janet Yellen’s market oversight and statement.