Thu, September 19, 2024 at 10:14

• 

  Kang-hoon

  • Hello, Annie.

  • Today, I want to discuss Arthur Hayes' recent comments on the US Federal Reserve's upcoming interest rate cuts.

  • He believes these cuts could trigger a short-term crash in the crypto market.

  • 
• Annie

  • Oh, really?

  • That's quite concerning.😟 What exactly did he say?

  
• 

  Kang-hoon

  • Hayes, the former CEO of BitMEX, stated at the Token2049 event in Singapore on September 18 that the Fed is making a colossal mistake by cutting rates while the US government is heavily printing and spending money.

  • 
• Annie

  • I see.

  • So, he thinks this will negatively impact the market?🤔

  
• ADward

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• 

  Kang-hoon

  • Yes, exactly.

  • He believes that while many expect the stock market to rise with the rate cuts, it will actually collapse a few days after the Fed's decision.

• Annie

  • Wow, that's a bold prediction.

  • Did he provide any evidence to support his claim?

  
• 

  Kang-hoon

  • Indeed, he pointed out that almost 50% of central banks worldwide are currently in rate-cutting mode.

  • He mentioned a recent example where the Japanese yen dropped significantly, causing a mini financial collapse.

• Annie

  • That's interesting.

  • But how does this relate to the crypto market specifically?

  
• 

  Kang-hoon

  • Hayes argued that in times of market turmoil, investors would prefer the safety of government-backed Treasury Bills, which yield around 5%, over riskier crypto assets.

• Annie

  • So, he's saying that the yields in crypto aren't competitive enough?😕

  
• 

  Kang-hoon

  • Precisely.

  • He highlighted that many crypto assets' yields are either slightly above or below the rate of T-bills, making them less attractive in a high-interest-rate environment.

• Annie

  • Did he mention any specific cryptocurrencies?

  
• 

  Kang-hoon

  • Yes, he discussed Ethereum, Ethena, Pendle, and Ondo.

  • Hayes emphasized that he holds significant investments in all except Ondo.

• Annie

  • What about Ethereum?

  • How does it fare in this scenario?

  
• 

  Kang-hoon

  • Hayes referred to Ethereum as an 'internet bond' and noted that its staking yields of 3-4% are not attractive enough compared to the 5.5% yield of T-bills.

  • However, he believes that a rapid fall in interest rates could boost Ethereum's prospects.

• Annie

  • So, he's still somewhat optimistic about Ethereum despite its current underperformance?

  
• 

  Kang-hoon

  • Yes, despite the challenges, Hayes continues to invest in Ethereum.

  • He believes its potential will increase if interest rates fall significantly.

• Annie

  • That's a lot to take in.

  • Do other experts share his skepticism about the rate cuts?

  
• 

  Kang-hoon

  • Indeed, another crypto market expert also suggested that the Fed's decision to cut rates could lead to market sell-offs and corrections.

• Annie

  • Given all this information, would you say this news is a bad sign for the market?

  
• 

  Kang-hoon

  • Yes, Annie.

  • In the short term, this news is likely a negative indicator for the market.

  • The anticipated rate cuts could lead to increased volatility and potential downturns, especially in the crypto sector.

  • Upon comprehensive consideration, this news is perceived as a 😱Bearish.