At the Token2049 event in Singapore, BitMEX co-founder Arthur Hayes made some attention-grabbing predictions about the crypto market. According to Hayes, Ethereum (ETH) is primed for a major bull run once the U.S. Federal Reserve cuts rates, bringing U.S. Treasury yields below 4%.
Hayes, a prominent figure in the crypto space, likened ETH to a "digital bond" with staking yields that hover around 4%. In his view, if the Fed slashes rates, assets that outpace U.S. Treasuries in returns — such as ETH and other yield-bearing tokens like ENA, ETHFI, and PENDLE — could see significant gains. Conversely, Hayes believes that tokens tied to real-world assets (RWAs), such as ONDO, might lose their competitive edge under these conditions.
However, Hayes didn't stop at bullish predictions for ETH. He also sounded the alarm about a potential nosedive in risk assets if the Fed begins to reduce rates aggressively. While many investors typically view lower rates as a green light for risk-taking, Hayes voiced skepticism. He pointed to persistent inflation in the U.S. and warned that narrowing interest rate spreads between the U.S. and Japan could strengthen the yen, putting U.S. dollar-based assets at a disadvantage. He also anticipates U.S. rates to eventually drop to near-zero levels, positioning cryptocurrencies as one of the few remaining globally transferable assets, offering an escape from traditional financial systems.
Mixed Reactions to Hayes' Bold Forecast
Hayes’ comments add to the ongoing debate among analysts about the potential impacts of the Fed’s upcoming rate decisions on the crypto market. While Hayes foresees a sharp drop in risk assets, including crypto, following rate cuts, many analysts believe the opposite: that lower interest rates would free up more liquidity for investors, fueling a renewed appetite for risk assets like cryptocurrencies.
This divergence in opinions highlights the uncertainty surrounding crypto’s next move. Historically, the market has often reacted unpredictably, sometimes rallying on rumors and selling off once the news breaks — a possible outcome that aligns with Hayes’ cautious outlook. What seems certain, however, is that a Fed rate cut will likely usher in increased volatility, leaving crypto investors bracing for either a surge or a slump.
