Arthur Hayes Predicts Crypto Crash from Fed Interest Rate Cuts

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As an analyst with a keen eye for market trends and over two decades of experience in the financial industry, I find Arthur Hayes’ opinions at Token2049 intriguing. His insights into the potential impact of Fed rate cuts on Bitcoin and the crypto market are noteworthy, given his deep understanding of macroeconomic factors.

Arthur Hayes, a prominent figure in the cryptocurrency world, predicted on Wednesday that reductions in Fed interest rates would lead to a collapse in Bitcoin and the overall crypto market. These remarks were made at the significant crypto conference Token2049. The US Federal Reserve is anticipated to lower rates by 25-50 basis points, with many expecting a 50 bps cut due to decreasing inflation and job market trends.

Arthur Hayes Says Fed Rate Cut Will Crash Crypto Market

At the Token2049 gathering on September 18th, Arthur Hayes, a co-founder of BitMEX, discussed economic patterns like interest rate reductions by the Federal Reserve and their influence on the cryptocurrency market.

As an analyst, I express my conviction that the US Federal Reserve’s potential interest rate cut could trigger a market crash, affecting not only traditional assets like stocks but also cryptocurrencies such as Bitcoin. I argue that, given the current economic climate, a 50 basis points rate cut would be a significant blunder on the Fed’s part. Based on the CME FedWatch tool, there is approximately a 65% likelihood of this 50 bps rate cut following today’s FOMC meeting.

Arthur Hayes predicts that the markets could experience a significant downturn in the coming days due to the shrinking difference in interest rates between the U.S. dollar and the Japanese yen. The unwinding of Yen carry trades by large investors like hedge funds almost caused a minor financial crisis when the Bank of Japan increased interest rates, as seen previously.

According to CoinGape Media’s perspective, it aligns with Hayes’. Their recent report indicates that economists predict the Bank of Japan could increase rates as soon as October.

Invest in Treasury Bills And Ethereum

Arthur Hayes stated that he’s experienced approximately a 5.5% return on Treasury bills for over a year since the Fed ceased increasing interest rates. In contrast, assets offering lower yields than Treasury bills have not been appealing to investors. He attributes the continued low prices of ETH to this very reason.

Today, the U.S. dollar index (DXY) dropped to a minimum of 100.74. Meanwhile, the U.S. 10-year Treasury yield remained close to its 15-month lows at approximately 3.64%, as investors prepared for the forthcoming Federal Reserve’s monetary policy announcement.

If the Federal Reserve enacts interest rate cuts, causing U.S. Treasury prices to decrease, Ethereum could become more appealing, according to Hayes’ viewpoint. He advises considering investments in Ethereum, Pendle, Ethena’s USDe, and similar assets.

Instead of purchasing treasury bonds yourself, we can handle the purchase, organize them within a legal framework, and issue you a certificate that provides regular interest payments.

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2024-09-18 13:35