Arthur Hayes: a Fed rate cut could crash the market

Is it really likely to happen anytime soon?

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Arthur Hayes, co-founder of BitMEX and CIO at Maelstrom, shared his views on the macroeconomic outlook and its impact on crypto markets during TOKEN2049 in Singapore

In his keynote, "Thoughts on Macroeconomics Current Events," he predicted a market crash driven by Federal Reserve actions, followed by a new bull market

As the Fed prepares to cut interest rates for the first time since COVID-19, investors expect significant market shifts

The Federal Reserve (Fed) has kept the interest rate at 5.5% since July 2023. The monetary tightening cycle was started in the fall of 2022

Hayes criticized the Fed's decision to cut rates amid high government spending and inflation above target, warning it could trigger a market collapse

He predicted the collapse would follow shortly after the rate adjustment due to the shrinking interest rate gap between the US dollar and the Japanese yen

Hayes highlighted Ethereum, along with ENA, ETHFI, and PENDLE, as potential winners if treasury yields decline

He described Ethereum as an "Internet bond" with a 4% yield, potentially making it more attractive than the US dollar or Treasury bonds

Hayes dismissed concerns of Ethereum's underperformance, predicting it would outperform both the US dollar and Treasury bonds if yields drop significantly

He also forecasted a market drop following the Fed's rate cut, followed by a new bull market, benefiting investors, particularly those holding Ethereum and similar assets