BitMEX Co-Founder Arthur Hayes Predicts Crypto Crash After Fed Rate Cut

Arthur Hayes, BitMEX co-founder and Chief Investment Officer of Maelstrom, stated in an interview with CoinDesk during the Token2049 conference in Singapore that a Fed rate cut, which could be announced soon, might trigger a sharp decline in risk assets, including cryptocurrencies, within days.

Hayes believes that cutting rates is a bad decision as inflation remains a problem in the US, and lowering borrowing costs will only exacerbate it. He also pointed out that a narrowing of the US-Japan interest rate differential could lead to a significant rise in the Japanese Yen, triggering a wave of yen carry trade unwindings. Hayes anticipates US rates eventually dropping to near zero levels from the current 5.25%-5.5% range.

Echoing Scottish market strategist Russel Napier's view, Hayes believes that the era of central banks is over and politicians will take over, directing banks to create liquidity in specific economic sectors. In this scenario, Hayes sees cryptocurrencies as the only globally portable asset that allows investors to escape this system.