Arthur Hayes Reveals the 'Perfect Time' to Buy Crypto

Everybody is wondering when are we going to see the effects of the bitcoin halving kicking in and having like an impact on the trajectory of bitcoin price.

So I mean, you can look at the previous halvings and anywhere between four to 18 months later you get a new all time high. The more important thing is that the major economies around the world are going to print even more money between now and say, the next 18 to 24 months. I think the big event that crypto investors need to follow very closely is the upcoming U.S. presidential election. Not because the U.S. is important, just because it's the U.S. but more so it's the global empire. Its financial policy influences what the Chinese, the Japanese, the Europeans all do. And so if you have an easing of monetary policy, because Janet Yellen, US Treasury Secretary, and Jerome Powell, the Fed President, are doing everything they can to make sure that Joe Biden gets reelected. And that basically means how do I reduce the cost of government borrowing so that him and his Democratic party can hand out more goodies to the electorate and get reelected? That's what's going to happen between now and the end of the year. When you control the, the purse of the government, it's very easy to do so by printing money, borrowing it and handing it out to people in various forms.

So essentially you think the American elections are going to be a net positive for the crypto market, regardless of who.

Wins, whoever wins they're campaigning on. I'm going to give you something that you don't have to pay for and I'm going to pay for it by borrowing my money. I'm going to pay for it by using the central bank to print money. And that's really what the fight is about. The bull market is still going to continue. Obviously we've slowed down a bit and now we're entering the summer, the northern hemispheric summer, where things slow down, volatility declines, and we're going to get a choppy range bond market. But for those people who have fiat and extra cash that want to allocate to crypto, this is the perfect opportunity to do so.

So one of the macro indicators that seem to have the biggest impact on the price Of Bitcoin is M2, so global liquidity. In previous years we saw how that indicator skyrocketed during the COVID pandemic, when governments were injecting massive amounts of capital into the economy in order to prevent it from collapsing. And then we saw that later in 2022, that indicator started going down. And now it's pretty much flat. So. So I guess that that indicator should go up again in order for bitcoin to resume its bull run.

The problem with M2 is that it doesn't capture all the things that are used as credit money in the economy. And every time there's a new problem, the elites in charge up with a new way to confuse people about how they're going to print money. So maybe it's M2, maybe it's broad banking reserves, maybe it's the reserves held at the central bank. It depends on every single economy and how they want to print money. But at the end of the day, the goal is how do I stuff more credit money through the economy without getting a negative reaction from the populace being like, oh, what's all this inflation? I'm going to blame the people in charge. So yes, M2 is a good measure and sometimes it works and then sometimes it's flat, but it's been flat for a while. But you still see gold in crypto doing very well. You still see major tech indices at all new time highs. So there is an ample liquidity. It's increasing. It just that might be in the indices that people are familiar with from how it operated in the past.

Two contrasting narrative. One saying Bitcoin is not going to perform as well as in previous cycles, others saying it's going to perform so much better because of these spot Bitcoin ETFs. What is your take in between these two narratives?

So I go back to the first thing I said was that the thing that got us from 2009 to 2024 in that massive central bank printing government spending that's going to continue now, the addition of the ETF is very important because now instead of just, you know, muppets like us who aren't, you know, fiduciaries or institutional investors who are buying these things, we now have an institutional investor class who are saying the same thing. You have all these luminaries of the financial services industry in the west saying the same thing that I'm saying, which is the government spending by western democratic governments, and I'll add China in there as well, is unsustainable at these levels. And they're questioning whether or not owning a domestically risk free domestic currency bond is a good idea for a fiduciary. Now if that belief holds, then these institutions can now express that view through a BlackRock or Fidelity or pick your large fund managers Bitcoin ETF. They don't have to custody it, they don't have to worry about who they bought it from. They're buying it from the establishment itself. And so they can express this negative view on the sovereign bond market directly into the best performing asset in human history over the last 15 years. So while the growth in AUM might have slowed, the marketing machine of Tradfi is just getting started. These are the most successful products ever for BlackRock and fidelity and the rest of these fund managers. Do you think they're just going to stop after three months? Of course not. They're going to be advertising in all the mainstream financial press. This is a long game. So I think people are underestimating the stickiness of these flows. That doesn't mean that we're entering into, you know, a Kyle Davies and Suju super cycle. That's complete bullshit. There will be a downturn in the price of bitcoin at some point, but I think that our expectations need to realign with the fact that there's going to be even more money printed by the major economic blocks between now and the next bear market.

What do you think is a signal that people should look at in order to understand the peak of this bull cycle? How can people understand that we reach the top?

Probably you're going to start seeing some sort of positive real rate and define the real rate as your 10 year government bond minus nominal GDP. Or maybe there's going to be some major global conflict and, you know, a reordering of the economic and political situation between the major powers. That sort of will culminate in obviously some orgy of money printing. And after that, our expectations might just get ahead of us. And that probably is a signal that it's time to come down in price. Do I have a specific thing I'm looking for? No, it's more of a feeling. The fact that we just passed 70,000, now we're bound at, I don't know, 63 or 64,000 Bitcoin. And people are questioning whether that was the end of the bull market. And we just started, I mean, this run, it really just started in November of 2023. Well, I would say that that probably means that we're not even close because we have people inside of the ecosystem are still doubting it. When you say, when you hear everyone saying we have fundamentally changed the, you know, the cycle of bitcoin, bitcoin could never go down. When I start hearing more and more of that from people who are doubting it at this point in time of the cycle, then I'll start to get a bit more worried that Our expectations of what, you know, money printing can do for Bitcoin are getting ahead of what will actually happen. But I don't think we're there yet.

So in some of your previous interviews you said that you were pretty excited about Solana and the ecosystem around it. At the same time you said that the Solana blockchain is dog shit, I guess because of these outages that have been affecting Solana in the latest months. So what in general is your view on Solana?

I like Solana as a trading vehicle, as a high crypto beta momentum play. So I buy Solana when I think the market's about to start pumping. I'll sell it when I think there's going to be, you know, a downturn and I'll just play, play the yo yo as it goes on. Do I think it has a fundamental way to beat Ethereum? No, I think it's suffering from the same things that ETH suffered from in its come up cycle. Right. You had an advertised throughput when in reality it's not there. And there's various reasons for that. I'm sure that's a lot of developers are hard at work trying to fix them. They've done a good job in creating a culture around meme coins, a good ui, UX and some of their applications. But at the end of the day, was it the 10 or 20,000 or 100,000, you know, transactions per second that was advertised to the community is complete bullshit. That doesn't mean that the chain doesn't work or that it doesn't provide value. It's just another example that you were able to bring something successful to Solana meme coin trading and it broke the network. Now does that mean that it's going to go to zero? No. I do think there's a very engaged community that likes to buy and hold this thing and therefore it's an easy trading vehicle. It's very liquid. But I don't see it long term supplanting Eth. And I think that there are some other layer one competitors that are going to see what's happening at Solana, make some improvements and you could see a very, very hotly contested fight for that number two spot behind Ethereum. I don't think Solana has a big moat here. They should be very worried.

People were looking for more positive, bullish narratives. One of them was the potential approval of a spot Ethereum etf. I talked to a few analysts, Bloomberg analysts, they said that now they don't necessarily expect that to happen anytime soon. What do you think?

I guess to find soon? I said probably in the next 12 to 24 months. I think there'll be a spot Ethereum ETF, there'll be a Solana ETF, there'll be every single other cryptocurrency ETF that any of these fund managers can get through. Because if the Bitcoin one did so well and they're making so much money doing this, why wouldn't you do it for all other cryptocurrencies? These are passive investing behemoths. They don't have a view on whether Ethereum or Solana or Bitcoin is good or bad per se. It's more like if the, if the clientele wants it and you know, the institutional retail investors in the west want to own these things, instead of letting you know, U.S. exchange owners offshore on these things, why don't they own them themselves? And so that's why there's going to be a secular rise of different products. There'll be a few obstacles put into place by the regulators, but at the end of the day, these are captured institutions. And whatever Larry Fink wants to do, he's going to do it. Maybe it's not going to happen this summer, but I have extreme confidence that by the end of this cycle there will be an Ethereum ETF. BlackRock, Fidelity, Vanguard. Pick your name of your major asset manager. They'll have one because they make so much money doing it. Why wouldn't you do it?

Now, I wanted to ask you about another hot narrative of descriptable market, which is layer twos on Bitcoin. This new ecosystem that is being built on top of Bitcoin. How big do you think this thing is?

So culture is the most important thing in humanity, right? We do all this stuff and at the end of the day we have free time and we do culture, sports, arts, go to nice restaurants, go to see a play, whatever it is. So when we can bring culture to the blockchain ecosystem, we can onboard the next billion people because that's what they care about. Someone is more likely to go spend a few hours in line to buy a Louis Vuittong bag. Thank you. They are to learn about financial freedom and use MetaMask. And so if we're able to bring something that people actually care about intrinsically, which is digital art or some other type of culture, and we're able to trade it and experience it natively on a blockchain, then you're going to see orders of magnitude more engagement from those who otherwise wouldn't participate. An example Cryptokitties broke Ethereum in 2017. Dog with Hat and other meme coins broke Salana in 2024 Ordinals runes BRC20. These things are going to fill blocks. They're going to provide transaction fees for miners who now have just lost half their block subsidy. It's going to allay these concerns of what are we going to do when the block subsidy goes away at Bitcoin? Well, humanity's culture is going to be on chain and that is extremely bullish for the bitcoin ecosystem. Maelstrom, my fund, we've invested in oil a ordinals wallet and we'll continue to make other investments in this space as I believe this is the most important thing that we have to get right. And as a crypto ecosystem, if we can bring culture on chain, then we bring the users.

We are going to see the market, as you say, trading sideways probably for a while. People are still willing to make money with crypto. What do you think is the best way at this point to gain some, some sort of passive income using crypto?

So I can't speak to what's best for every sort of investor, but I can tell you what I do and what we do at Maelstrom. So on one end there is an I don't want to have any sort of cryptocurrency risk, but I want to earn a return in the cryptocurrency ecosystem. And what we do at that situation is we have, you know, large synthetic dollar positions in Athena. So the USDE, this staked USDE yields anywhere, you know, it's in the past between 10 to 60% APY and that's because they're able to capture the basis slash cash and carry yield on Ethereum versus US dollar and Bitcoin versus US dollar perpetual swaps and the Ethereum staking yield. Now, when you apply this strategy, you don't have any price risk of Ethereum or Bitcoin. If the market goes up in crypto, that's, that's fine, you don't make any more money. You make your 10, 15, 20%. Whatever it is, it's a variable rate. It could go negative as well. Right. There's definitely that risk there.

Actually, I want to touch upon Athena because it's a controversial sort of project. People remember what happened with Terra Luna. They were promising unre rates and then of course the scheme collapsed. We remember the Celsius in the last bull market. It ended up collapsing as well because it was promising like unreal Rates why people should trust a project like Athena, at least on the superficial level it's been often compared to ust. What would be your response?

Well that as you said, all of right there, a superficial response of lack of understanding in what you're doing. If you are have that opinion and you lost money in Terra Luna, that's probably because you didn't read the white paper. The white paper clearly showed what would happen in the situation where the peg broke to the downside and it was a textbook definition of a death spiral. So if you lost money because you didn't read that, then that's your fault for Athena. Athena could fail. Absolutely. It will not fail because the peg broke and they're minted, you know, infinite amounts of Luna to essentially try to keep the peg that had a zero value. That's not why Athena could fail. People say oh the Athena interest rate is very high. Well it's very high because we are in a bull market mode and speculators on the long side are willing to pay a high rate of interest to get leveraged exposure to Ethereum and Bitcoin and other cryptos. Athena is essentially capturing the cash and carry or basis trading strategy that has been around since I've been trading crypto in 2023. Packaging that up and allowing you to tokenize that. And so yes, you can mimic the exact same thing that Athena is doing without putting your money with the protocol. But if you want to use the USDE or staked USDE throughout the DeFi ecosystem, then this tokenized form is a step change in how we can integrate protocols together.

Arthur, I just want to ask you if you could, if you could give us your price outlook for bitcoin in terms of let's say end of the year, end of this bull market, what sort of price range are you looking at?

So end of the year I think we're going to be between 70 to $100,000 on the price of Bitcoin. End of 2024, my, you know, long term sort of this cycle all time high, anywhere between, you know, I think it's going to be somewhere close to a million US dollars for one bitcoin. On the upside, that's my prediction. I hope we get there. Whether we get even close, that'll be good.

Wow. But that's quite impressive. Most of the predictions for the top of this cycle are much more moderate.

So the difference between this cycle and all the previous ones is the geopolitical and macroeconomic situation of every other major power. And that is we are in the midst of changing the world order. I don't know what that new world order will be, but the people who. Who make money off of the old water don't want it to change. And therefore, they're going to print more money than we've ever seen in human history to try to forestall that change. The change will still happen. They will still get swept aside by the tides of history. But in. In its wake, we have Bitcoin. And that allows us to escape.

Thanks a lot, Artur, for being on our show. It's always a pleasure.

Thank you for having me. It.