According to TechFlow, Arthur Hayes, co-founder of BitMEX and chief investment officer of Maelstrom, said in an interview with CoinDesk during the Token2049 conference in Singapore that the Federal Reserve is about to announce its first interest rate cut since 2020, but risky assets (including cryptocurrencies) may plummet within a few days after the rate cut.

Hayes believes that cutting interest rates is a bad decision because inflation is still a problem in the United States and lowering borrowing costs will exacerbate inflation.

In addition, the narrowing of the U.S.-Japan interest rate gap could lead to a sharp appreciation of the yen, triggering the unwinding of yen carry trades. Hayes expects U.S. interest rates to eventually fall to near zero from the current 5.25%-5.5%.

He agrees with Russel Napier, a market strategist at Scottish Markets, that the era of central banks is over and that politicians will take over and instruct banks to create liquidity in specific areas of the economy.

In this scenario, cryptocurrencies would become the only globally portable assets that would allow investors to escape the system, Hayes said.