"HELLO MOTHERFUCKER!" BitMEX founder Arthur Hayes once again opened his speech at Token2049 this year with his signature line. After igniting the atmosphere of the audience, he started with "Thoughts on Current Events in Macroeconomics" , pointed out his optimism about the price of ETH, and at the same time pessimistic about the subsequent development of the RWA protocol.

Arthur Hayes: Cutting interest rates too early will trigger a market crash

At the beginning of his speech, Arthur clearly expressed his concerns about tonight's Fed press conference. He expected that there would be a 60% to 70% chance of cutting interest rates by 50 basis points, but he believed that this would be a "huge mistake." The reasoning is that inflation remains above target and real GDP growth has exceeded 2% for the past eight to nine quarters. In this case, while investors expect rate cuts to boost stocks and other markets, Arthur believes it could instead lead to a market collapse, mainly due to changes in the interest rate differential between the U.S. dollar and the yen.

He noted that a few weeks ago, the yen rose from 162 to 142 to the dollar in 14 trading days, almost triggering a mini-financial crisis. Arthur believes this could happen again if interest rates are cut too early.

Why has ETH price performed poorly over the past few months?

Turning the topic back to crypto assets, Arthur mentioned that the price of ETH has performed poorly in the past few months and has been severely compared with BTC. The main reason is that ETH is not attractive as an "Internet Bond" and it only provides The staking interest rate is about 3-4%. If you do nothing, you can get interest rates as high as 5.5% by holding U.S. Treasury bonds, so why do investors need to choose to hold riskier assets?

In addition, Arthur also mentioned the recently popular DeFi protocols, Ethena and Pendle. Ethena provides users with an interest rate of approximately 4.8% through its delta neutral strategy; Pendle allows users to obtain a fixed interest rate of approximately 10% through staking. .

However, when you can get an interest rate of 5.5% by holding U.S. Treasury bonds, if these DeFi protocols cannot provide returns that far exceed those of Treasury bonds, investors will not be willing to put their assets in these protocols considering the DeFi risks and smart contract risks. , and this is why the token prices of Pendle and Ethena continue to fall.

Interest rate cuts will affect the development of RWA protocols

However, Arthur believes things will change when the Fed starts cutting interest rates. When the U.S. Treasury bond interest rate drops below 4%, ETH will regain its interest rate advantage, the bull market will be rekindled, and the above-mentioned protocols will also benefit from this.

In the process of cutting interest rates, Arthur said that the RWA protocol will be the most damaged, because the current mainstream RWA protocol is mainly based on US Treasury bonds, such as Ondo, which provides USDY holders with an interest rate of 5.35% and has as much as 600 million USD TVL. However, as the interest rate on government bonds decreases, the USDY interest rate will become unattractive, which will affect the development of the protocol.

This article Token2049｜Arthur Hayes talks about why the price of ETH is weak? Why is RWA the biggest victim of interest rate cuts? First appeared in Chain News ABMedia.