Source: Crypto Banter
Compiled by: Azuma, Odaily Planet Daily
Editor’s note: The industry big shot who loves to predict market trends, BitMEX co-founder Arthur Hayes, has come out again to predict market movements. During a podcast discussion on Crypto Banter this morning, Arthur Hayes shared his insights on topics such as the possibility of interest rate cuts, ETH trends, and altcoin selections.
The following is the full content discussed in the podcast by Arthur Hayes, compiled by Odaily Planet Daily. For the sake of reading fluency, some content has been omitted.
Powell and interest rate cuts, as well as market trends for the second half of the year.
Host: I saw some of your previous tweets, especially this one from August 2nd: “The tariff bill will take effect in the third quarter, at least the market believes that no major economy can quickly create enough credit to boost nominal GDP - Bitcoin will test $100,000, while Ethereum will test $3,000…” Can you elaborate on your view of the market trends for the second half of the year? I believe Powell must lower interest rates in September; he seems like he has a gun to his head right now. What do you think?
Arthur Hayes: I don’t think Powell has to do anything. I’ve discussed this with many macro strategists, and they’ve given various reasons. Of course, some will talk about the labor market situation; some will say that the U.S. may already be in a recession or will soon fall into one; others will say that tariffs will disrupt everything… I understand all this noise, but humans are strange. At some odd points, people suddenly decide to have ‘principles’, to have ‘dignity’ and ‘face’.
If Powell really thinks of himself as “Volcker 2.0”, what could prove himself better than resisting Trump’s pressure? For instance, not lowering interest rates and insisting on serving his term until May 2026 before stepping down, rather than resigning early. This is entirely possible. In such a scenario, there could be a situation where Powell overstays his term, coupled with a bunch of Democratic appointees obstructing Trump’s policies. I don’t know the probability of this situation, but hardly anyone in the market has seriously considered it.
Of course, this does not mean that the Trump administration cannot find a way to “print money.” If the government really wants to print money, it can always find a way. So I am just reminding of the risks and cannot provide a probability.
Clearly, I think we are entering a “gray area.” Friday is the Jackson Hole summit, and Powell is set to speak. Everyone is looking forward to him revealing the direction for September: will there be a rate cut? Or are interest rates still not considered tight, or could they even be higher? No one knows what he will say. The Treasury is still issuing bonds, and the reverse repurchase balance has already been zeroed out. The market opened weakly this week, for example, ETH dropped by 10%, so I feel this is a period of uncertainty.
Will the market at the end of the year be higher than it is now? I think it will. If you haven’t leveraged, you actually don’t need to worry at all; maybe it will drop another 15%-20% this week. If you have spare cash, this will be a good opportunity to buy the dip. I believe there will definitely be “money printing” before the end of the year. Bitcoin may soar to $250,000, and ETH may exceed $10,000. But before that, the autumn may be relatively volatile.
Host: I agree with most of your points, which also aligns with our judgment. There might be a wave of correction before the end of the year, and then we will see the real climax of the bull market. I will look at the data: CPI lower than expected, PPI higher than expected, employment data revised… The market is currently giving an 83% probability that interest rates will be lowered. I think your point about Powell being a “principled” person has some merit, but I still tend to believe he will lower interest rates in September, unless something unexpected happens.
Arthur Hayes: Why is lowering interest rates the “right choice”? The data from the U.S. Bureau of Labor Statistics (BLS) is garbage, completely manipulated by partisan interests. CPI is also garbage, and statistical models can be manipulated at will. After Trump took office, the head of the BLS was replaced, and this agency will eventually become his megaphone, so Powell can completely say: “These data are unclear, we need more time, and we will temporarily maintain the interest rate at 4.5%.”
I just want to remind everyone from another perspective: don’t place your hopes on so-called “data.” Back in 2022, people were also saying that the data pointed to a recession, and Powell had to cut interest rates, but he directly raised rates by 75 basis points, which severely impacted the market. So it is entirely possible that we could replay the situation of 2022 — the market expects rate cuts, but Powell suddenly delivers a “hawkish punch,” resulting in a market crash.
Host: Well, I think there will be at least a 25 basis point rate cut in September, even if it’s just because he’s had enough of the external criticism.
Arthur Hayes: Are you sure? If he really wants to be the “Volcker 2.0”, then this is precisely the opportunity to prove himself – withstand the president’s overreach and maintain the independence of the Federal Reserve.
Host: So what is your baseline judgment? Do you think there will be no rate cuts this year at all? Or just one or two cuts? What is your baseline forecast?
Arthur Hayes: My baseline judgment is — I have no idea. I won’t load up heavily based on these false data points and get myself stuck. You can interpret this data from different angles, but they are all unreliable. I just feel that the market is expecting Powell to cut rates, but no one is seriously considering the scenario where “Powell sticks to his principles for the first time” and directly tells Trump, “screw you,” by not cutting rates in an election year.
Do you remember when Kamala Harris was campaigning back in the day? The labor market was good, unemployment was low, inflation was off the charts, but the Federal Reserve still cut rates by 50 basis points to help her. There were even Fed officials who openly stated, “The Fed will do everything it can to prevent Trump from being elected,” although it wasn’t Powell himself who said it, but other board members made their stance clear. So, we might see a similar situation now: the market calculates an 83% chance of a rate cut based on the data, but what Powell is thinking is: “The Fed is above partisan politics, so we won’t cut rates.”
I am not saying this will definitely happen; I am just reminding you that it is a possibility. Personally, I would not trade based on the assumption of a “50 basis point rate cut by the Federal Reserve”. Because even if Powell does not cut, the Trump administration has many other methods to stimulate the market. So there may be short-term pain, but this may actually push the Trump administration to use more aggressive and “unconventional” means to print money to advance their economic agenda.
Host: So your benchmark judgment is that they will definitely find a way to “print money” before the end of the year?
Arthur Hayes: That’s right. They will definitely do something. I don’t know exactly what means they will use, but I’m very sure that if Powell insists on not cutting interest rates, the government will definitely find a way to “squeeze out liquidity.”
Short-term and long-term price predictions for ETH
Host: Alright, so you mentioned earlier that ETH will test 3000 USD. Do you think ETH will reach 3000 USD first before breaking the historical high?
Arthur Hayes: I don’t think so. At that time, I said ETH would test $3000 before it broke through $4000, and later Jane and I bought back some ETH. From the chart analysis, it will definitely rise further; we cannot go against the market.
If Powell delivers a hawkish speech at Jackson Hole, I think ETH might first retrace to $4000.
Host: In this cycle, the price of Bitcoin has exceeded its previous high by about 70%, while ETH is still struggling to break its previous high. Do you think ETH will experience a similar catch-up rally, for example, rising to 70% above its previous high, reaching 5000, 6000, or even 7000 dollars?
Arthur Hayes: I think ETH will reach between 10,000 and 20,000 USD. Once it breaks the historical high, the upward potential will be completely opened up. Additionally, as digital asset treasury companies continue to raise funds, if the assets they purchase keep hitting new highs, the fundraising process will become easier, and the price will keep pushing upwards.
It mainly depends on how much funding these companies can raise and how much money the government wants to print. I’m not the type to rigidly adhere to a “four-year cycle.” How long this cycle lasts depends on how they play it.
The Trump administration has not yet fully entered the “money printing rhythm.” They are still paving the way, testing various methods to see which one works. They are sending signals of “we want to heat up the economy,” throwing out various ideas to see what can be implemented. It may take until mid-next year to clarify the choices for the Federal Reserve Chair and Board of Governors, such as whether Trump can fire Powell and install his own person.
Once this is determined, for the remainder of 2026 until the end of Trump’s term, they will print money madly. Because without printing money, you can’t win the election. The Democrats need to print money, and the Republicans have to print money too. Otherwise, his supporters and allies won’t benefit, how can he be re-elected?
Host: So you think this bull market could be extended for a long time. In other words, the traditional four-year cycle theory may become invalid. Trump’s money printing started a bit slow, but once the policies fully take effect, this cycle could extend to 2027 or 2028?
Arthur Hayes: That’s right.
Host: Wow, that’s really amazing. You said ETH could reach 10,000–20,000 dollars, not this year, but in the next three to four years, right?
Arthur Hayes: Yes. But my baseline judgment is that we will definitely have a big bull market, and all financial assets linked to Trump’s policies will benefit. Because he must win the election in 2026. The only thing voters care about is their wallets, am I richer today than I was yesterday? If not, I will vote for someone else. So they chose Trump over Biden, and the same logic will apply to the 2026 congressional elections and the 2028 presidential elections.
The Democratic Party will also clearly shout “we need to print money,” and the Republican Party will lose votes if they do not provide benefits. Therefore, both sides will desperately pump money.
Host: Haha, you’re almost making me want to vote for the Democrats. If they’re going to throw money around, I only care about the money anyway.
Arthur Hayes: Yes, in the end, it’s all about money; the party affiliation doesn’t matter.
ETH vs SOL
Host: ETH has recently captured the big narrative on Wall Street, and everything feels like a perfect chain reaction. First, Circle went public, which was much better than expected, drawing everyone’s attention to stablecoins; then, the stablecoin narrative naturally shifted to ETH; next, Joseph Lubin and Tom Lee both loudly called for bullish positions on ETH; as a result, ETH became the new darling of Wall Street. It has become the platform for “real-world assets.” Moreover, ETH now has prominent leaders, whom I refer to as “Batman and Superman”—Lubin and Tom Lee, one who speaks daily on CNBC with a microphone, and the other a founding elder of ETH… The question I want to ask is: if you could only put your money in one asset from now until the end of this cycle, would you choose SOL or ETH? Because until two months ago, everyone was pessimistic about ETH, almost unanimously supporting SOL. Now suddenly, it has become all about ETH.
Arthur Hayes: To be honest, both will rise. The question is just which one will rise more. I am a project advisor for Solana, so of course I believe that SOL will rise, but ETH is a larger asset and funds are flowing in faster. SOL and ETH will be an interesting competition; one side may rise faster, but that doesn’t mean the other side will lose; they will both go up.
Host: From the perspective of position allocation, would you allocate more heavily to ETH?
Arthur Hayes: Yes, I will lean more towards ETH.
The investment logic and bankruptcy risks of cryptocurrency treasury companies
Host: The shift in Wall Street’s attitude is indeed astonishing. What do you think about these “crypto treasury companies”? Some people are hesitating whether to hold ETH directly or to buy stocks of these companies, such as SBET or BMR, which sometimes trade at 1.8 times or even 2 times their net asset value. Would you recommend crypto investors to buy these stocks?
Arthur Hayes: The trading logic is very simple; you are essentially spending $2 to buy an asset worth $1 because you believe in the power of passive index funds. For example, I just had a meeting with the team from UPXI (a Solana treasury company), and I told them to thoroughly research which indices might include their stock, what mandatory buying rules fund managers have, and to meet the standards for average trading volume, market capitalization, and the listing exchange.
As long as these conditions are met, fund managers must buy your stock, regardless of what the company is actually doing. This is the MicroStrategy model, and it’s the method pioneered by Michael Saylor. They force capital inflow by entering various indices.
Host: Wouldn’t this create leverage risks in the market? For example, if you have 1 dollar of ETH, but it’s being hyped up to 2 dollars in some companies. Then there’s 1 dollar of “air” in between. In Michael Saylor’s case, he initially bought Bitcoin with money from bonds and convertible bonds, which could still generate returns for shareholders while repaying the principal to bondholders. But now most of the new generation treasury companies have learned their lesson; they all say, “We don’t want leverage,” because Michael Saylor has already demonstrated that debt can be called back, while different categories of stocks do not carry this risk. So what confuses me now is, why spend 2 dollars to buy an asset worth 1 dollar? I find it hard to find a reasonable explanation.
Arthur Hayes: The answer is simple: because you believe it will go exponential. Passive fund managers don’t care about the price, don’t care about the net value; the system requires them to buy, so they must buy. They must have the stocks purchased before the close. Whether it’s 1 dollar or 50,000 dollars, they don’t care.
Host: I understand, but I still feel that this is risky. For example, if the market crashes one day and these companies’ stock prices fall from 2 times their net value to below their net value, no one will buy them anymore. By then, they will lose their meaning of existence and can only liquidate their underlying assets, which will lead to a round of “deleveraging collapse” in the crypto market.
Arthur Hayes: (Collapse) Theoretically, this is possible, but in reality, it is not that easy. Because these are not ETFs, but companies. If the company’s management wants to “tough it out”, you must first buy enough shares, hold a shareholder meeting, and force them to liquidate. This process is very expensive, time-consuming, and may take years, and you may have to go to court.
So I’m not too worried about the so-called “chain collapse.” Unlike ETFs that can be redeemed on the same day, treasury companies are more complex.
Host: But do you agree that by the end of this cycle, there will be many opportunities to buy these companies at very low prices, just like when Grayscale was trading at a 50% discount back in the day.
Arthur Hayes: Yes, but back then it would take a long time and a lot of cost to actually realize the arbitrage.
Host: My concern is that not every team is Michael Saylor. When certain companies can no longer hold on and start liquidating their crypto assets, that will mark the end of this cycle.
Arthur Hayes: I agree. At that time, some treasury companies may be acquired at a net asset discount or directly liquidate their assets. Those leading projects will passively absorb capital, while the laggards will be eliminated.
Host: Which assets do you think will catch the eye of Wall Street and are worth setting up treasury companies? Clearly BTC, ETJ, and SOL have potential, and I’ve also seen treasury companies around BNB, TON, HYPE, and ENA. To what extent do you think this trend will develop? Will it cover the top 100 tokens? Or the top 20 tokens? How interested do you think Wall Street is in cryptocurrencies right now?
Arthur Hayes: As long as the market continues to rise - I don’t know exactly how much the bankers take from these trades, but it’s definitely not a problem for the sponsors to grab 3%, 4% or 5% - this is a fantastic business for investment banks; as long as there’s a profit to be made, they will build treasury companies for all assets.
The choice and logic of altcoins
Host: Let’s talk about altcoins. The last time I saw you during Dubai 2049, you told me to buy ETHFI, and as a result, ETHFI helped me purchase a new house and also paid for my child’s tuition. So what altcoins are you looking at now? For example, Ethena (ENA), are you still optimistic about it? Their stablecoin issuance has doubled from 6 billion to 12 billion, and with the market rates rising, the protocol’s yield has also recovered. It feels like this project has done a lot of things right.
Arthur Hayes: Yes. I have a macro logic regarding stablecoins, and I will be speaking at WebX in Japan next week, during which I will also publish an article. My point is that people’s imagination about stablecoins is not big enough. U.S. Treasury Secretary Yellen will use stablecoins to reverse the trend of “de-dollarization”—that is, to bring the global offshore dollar flow back to the United States, while providing banking services to the so-called “Global South (i.e., developing countries mainly located in Asia, Africa, and Latin America)” even if local regulations do not allow it.
Stablecoin issuers need to make profits from interest rate spreads, so they will use users’ funds to buy U.S. Treasury bonds. Assuming that by 2028, the circulation of U.S. dollar stablecoins will reach 10 trillion dollars, what does that mean? I will elaborate on this part in the article.
Ethena’s model is to bundle the ‘funding spreads’ in the crypto market and turn it into a stablecoin that generates returns. Essentially, you are lending money to speculators (those going long) and earning a profit in return. This trading model has existed in the crypto market for over a decade, but the Ethena team has packaged it as a DeFi product, making it easy for everyone to participate.
So I believe that Ethena can earn hundreds of millions of dollars in interest income each year through this path. When they start buying back tokens and ETH is surging again, the price of ENA will definitely skyrocket. My prediction is that Ethena will surpass Circle in the next 12 months, becoming the second largest stablecoin after Tether.
Host: This is a very bold prediction. Listening to your analysis, I also agree. Let me ask further, in reality, there will be a bunch of stablecoins, such as PayPal USD, USDT, USDC, Ethena, and Stripe’s stablecoin. So why would people keep swapping them? In what scenarios would you exchange USDT for USDC or for PayPal USD?
Arthur Hayes: The key is not the exchange, but the distribution. Social media platforms are the “tip of the spear”; who will open accounts for those who have not yet accessed the US dollar? The answer is Facebook (Meta) and X (Musk’s Twitter), as they will launch wallets. At that time, which stablecoin will be chosen will depend on the distribution capabilities of these platforms.
Host: You didn’t mention Telegram? It has 1 billion users.
Arthur Hayes: In my opinion, the chain of Telegram is a bit fake, with no real activity and legal troubles. I don’t think the U.S. government would hand over the distribution rights of “U.S. dollar policy” to Telegram. It is more likely to be given to “American capitalists” like Musk and Zuckerberg, who pay taxes, make donations, and are controlled.
For example, Filipinos really want to use US dollars, but local regulations prevent Citibank and JPMorgan from serving them directly. So the Trump administration can support WhatsApp to launch “USDT payments,” allowing Filipinos to receive dollar remittances directly through WhatsApp. This kind of “dollarization” cannot be stopped by anyone.
Once everyone has stablecoins, the next step is to spend money. For example, buying coffee at 7-11 or using a card at convenience stores. Domestic bank cards may not work well overseas, but Ether.fi is very useful. I have the Etherfi app on my iPhone and a physical card, so I can swipe it anywhere. In the future, when billions of people get USD stablecoins through Facebook and X, they will also need spending scenarios. Ether.fi can meet this demand and facilitate the spending of stablecoins.
Host: So, what about Hyperliquid? What is your logic?
Arthur Hayes: I believe Hyperliquid will become the largest exchange in the world, surpassing Binance. Because when stablecoins become widespread, a large number of new users will enter, and the only way for them to combat inflation is through speculation, and the place for speculation is on-chain derivatives exchanges. Hyperliquid offers low-cost, high-liquidity contracts and repurchases 97% of the profits in tokens, directly benefiting users.
For example, when a project is about to launch, it usually has to pay 7%-10% of its tokens to centralized exchanges (like Binance) as listing fees. However, on Hyperliquid, it costs almost nothing, and liquidity can be obtained immediately. This way, the project side does not need to “give away” tokens to centralized exchanges. As a result, Hyperliquid will gradually dominate the new issuance market.
Host: I understand. In the past, to earn higher returns, I would invest in some small-scale altcoins, but this time I choose to focus on leading projects like ENA and LINK, and then add a bit of leverage. I think this way the risk-reward ratio is better.
Arthur Hayes: Yes, I am currently only investing in projects that can generate real cash flow. I no longer pursue a thousandfold return, because that means having to endure a bunch of projects going to zero. I just want to hold onto my investments comfortably once large funds come in. For example, Hyperliquid is using 97% of its profits to buy back tokens, EtherFi has already started buybacks, and Ethena will be launching soon. The profits from these protocols will be directly distributed to us token holders, rather than being intercepted by the protocol teams.
Host: I agree with your logic. What about Chainlink? Recently it has suddenly become the new darling of Wall Street. Is it on your radar?
Arthur Hayes: To be honest, I haven’t really been paying attention. I haven’t done much in-depth research on oracles, and I’m not sure if their current positioning is still just focused on oracles.
NFT and CryptoPunks
Host: Alright, before I let you go, I have to tell you that I finally bought a CryptoPunks, even though I had said before “I will never buy one.” But that day you and Raoul Pal were both saying that CryptoPunks would outperform ETH, and I couldn’t resist buying one. Do you still have a positive outlook on them?
Arthur Hayes: Of course. Because everything humans do, aside from survival necessities, is an “identity game.” In reality, symbols of identity are art pieces, luxury cars, and big houses; online, symbols of identity are these scarce digital collectibles with stories behind them. CryptoPunks is the most representative NFT project, and its status is irreplaceable. So I must hold CryptoPunks; it will always be the “first,” and CryptoPunks has good liquidity, making it the most marketable series in NFTs.
When ETH rises to 20,000 dollars, many wealthy people will need to showcase their identity. They might not flaunt designer belts, but instead say, “Look, I have a CryptoPunk, I bought this pixel avatar for millions.” This is the new symbol of identity.
……
The following will be personal life discussions and small talk, so I won’t translate it here. Those interested can directly watch the original video.
