Arthur Hayes: ETH Bull Run to Start When Fed Cuts Rates Below 4%

• Arthur Hayes made massive predictions at the Token 2049 event in Singapore.
• Hayes believes the expected Fed’s rate cut can lead to an ETH bull run.
• The BitMEX co-founder foresees a sharp drop in risk assets to follow an interest rate cut.

BitMEX co-founder Arthur Hayes shared some bold predictions while speaking at the Token2049 crypto event. He believes a new ETH bull run will start when the U.S. Federal Reserve’s rate cuts push U.S. Treasury rates below 4%.

The well-known crypto figure compared ETH to an internet bond that offers staking yields of around 4%. According to Hayes, as the Federal Reserve cuts rates, tokens outperforming U.S. Treasuries in yields would see benefits. He pointed out tokens like ENA, ETH, ETHFI, and PENDLE as examples. However, he thinks real-world asset (RWA) tokens like ONDO would lose out in this scenario.

Meanwhile, the BitMEX co-founder warned of a potential sharp drop in risk assets if the Federal Reserve cuts interest rates. Hayes criticized the rate-cut decision, pointing to ongoing inflation in the U.S. He suggested that a narrowing U.S.-Japan interest rate spread could result in a stronger yen, putting the U.S. at a disadvantage on yen carry trades. Despite this, Hayes expects U.S. rates to drop near zero while believing cryptocurrencies will become the only globally portable asset for escaping traditional financial systems.

Read also: Interest Rate Cut vs. Inflation: The Fed’s Dilemma and Crypto’s Future

Contrasting Views on Rate Cuts

With his comments, Hayes joins several analysts making predictions about the potential effect of an upcoming rate cut by the Federal Reserve on the crypto market. Contrary to Hayes’ forecast of a sharp decline in crypto prices, many analysts believe cutting interest rates would free up more funds for consumers to invest in risky assets like cryptocurrencies. They think it would trigger more crypto demand and lead to rising prices in the crypto market.

However, considering the crypto market’s historical trend patterns, most users are waiting to see the outcome of the data before making their decisions. Some suspect the market might display a “buy the rumor, sell the news” behavior, which could align with Hayes’ prediction. Regardless, crypto users seem to generally agree that an interest rate cut by the Federal Reserve would trigger significant volatility in the cryptocurrency market.