BitMEX Co-Founder Arthur Hayes Predicts Crypto Crash Following US Rate Cut

In an interview at the Token2049 conference in Singapore, BitMEX co-founder Arthur Hayes predicted a potential crash in risk assets, including cryptocurrencies, following a rate cut by the Federal Reserve.

Hayes believes the impending rate cut, the first since 2020, is a "bad decision" as inflation remains a concern in the US. Lowering borrowing costs could exacerbate inflation. Additionally, the narrowing interest rate differential between the US and Japan could trigger a significant appreciation in the Japanese Yen, forcing a unwind of Yen carry trades.

Hayes anticipates US interest rates to eventually drop to near zero from the current range of 5.25%-5.5%. He echoes the sentiment of Russel Napier, a Scottish market strategist, who believes the era of central banks is over and politicians will now take control, directing banks to create liquidity in specific sectors of the economy.

Hayes argues that in such a scenario, cryptocurrencies would become the only globally portable asset allowing investors to escape the system.