Arthur Hayes' latest podcast: Got the script for next year, already fired 90% of the bullets.

_This article is from: _Kyle Crypto Hunt

Translation｜Odaily Planet Daily (@OdailyChina); Translator｜Azuma (@azumaeth)_

Editor’s Note: The market prediction expert, industry legend, and BitMEX co-founder Arthur Hayes is back to forecast market trends. In today’s updated Kyle Crypto Hunt podcast, Arthur Hayes shares his insights on macro liquidity changes, future market directions, personal positions, and operations.

The following is the full content of the discussion from Arthur Hayes' podcast, translated by Odaily Planet Daily, with some content omitted for smoother reading.

Opening Remarks

Everyone is eagerly waiting for the Federal Reserve to say that "spell," as if once that phrase is uttered, the positions in everyone's accounts will take off — "Quantitative Easing (QE) is here." But if you are still waiting for the Fed to announce it directly like before, you are like watching a foreign film without subtitles.

Today's guest is Arthur Hayes. He is the co-founder of the cryptocurrency exchange BitMEX. Before entering the cryptocurrency field, he worked in trading at Citigroup and Deutsche Bank, and is well-versed in macro analysis. You’d better watch this episode with a magnifying glass and take notes, because he says: "The headline you are expecting will not appear at all."

Part 1: The Latest Developments — Bank of Japan Interest Rate Hike

Host (Kyle Chasse): Arthur, it's great to have you on the show. Before we officially start, the most recent macro event is the Bank of Japan's (BOJ) decision. By the time the audience sees this episode, the decision should have been announced (Odaily Note: It has been confirmed to raise rates by 25 basis points). Do you think the rate hike will really happen? If it does, what does it mean for the market?

Arthur Hayes: Yes, after Ueda Kazuo (Odaily Note: Governor of the Bank of Japan) spoke a few weeks ago, he basically made it clear that a rate hike is "on the table," and subsequently, the market quickly raised the probability of a rate hike.

From what I’ve learned from some people more familiar with the BOJ's internal situation, the dollar-yen exchange rate between 155 and 160 is the "red line" for the BOJ, so they will definitely take necessary measures — either raise rates or allow some form of foreign exchange intervention — to prevent the yen from further depreciating and breaking through 160.

I think this rate hike will probably just adjust from 0.5% to 0.25% (Odaily Note: The final result is completely consistent with Arthur's prediction). In the context of an official inflation rate of about 3%, this has almost no substantive significance on a macro level. It may tighten the market slightly in the short term, but it will not change the essential trend.

Part 2: The World Focus — The Successor to the Federal Reserve

Host (Kyle Chasse): The most concerning question right now is who will succeed the Federal Reserve Chair. They all tend to favor rate cuts, but the paths are completely different. Do you think if Warsh (Kevin Warsh) takes over, it would pose a threat to the environment for risk assets?

Arthur Hayes: I always say one thing — the U.S. president will ultimately get the monetary policy he wants.

If you look back at the history since the Federal Reserve was established in 1913, the power struggle between the president and the Fed chair has never been new. This struggle has always been public, intense, and even ugly; Lyndon Johnson once physically confronted then-Fed Chair William Martin on his Texas farm just to force him to cut rates… So what people think of as Trump's harsh attitude towards Powell is really nothing.

The key is not what that person "believes" before becoming chair, but once he sits in that position, he will understand — he is there to work for Trump. Trump wants lower rates, more money supply, and a hotter market, while also seriously denying that these are related to inflation; otherwise, he and the Republicans will be out in the next election.

So no matter who becomes chair, the result will be the same. They will deploy any necessary tools to get the job done based on the situation. Who ultimately sits in that position doesn’t matter, and I don’t care.

Part 3: The Lifeblood of the Stock Market — Can the AI Bubble Continue?

Host (Kyle Chasse): What do you think about the interplay between inflation and liquidity? If we start massive "money printing" as Hassett (Kevin Hassett) expects, the liquidity environment will obviously be very bullish, but usually, the more you print, the higher the inflation, and ordinary retail investors will still be under pressure because of this.

Arthur Hayes: To me, the "rules of the game" for the Fed and the Treasury are actually very simple — the U.S. economy is essentially a highly financialized economy, and the stock market is the U.S. economy itself.

So ultimately, the authorities must ensure that the stock market rises at all costs, and this extends to mean that the AI wave must continue. I know some people are starting to question the AI bubble, saying there has been a correction, but I think they are completely missing the point. If you are a stock investor, you should go long and accept some volatility; it is very rash to short the Nasdaq or companies like Nvidia right now because this bubble is far from bursting, and the authorities need it to continue to exist.

Trump has bet the entire U.S. economy on the success of AI. And for AI to succeed, the only way is through more debt-driven, lower cost of capital, and greater money supply. He will keep doing this until he can’t anymore.

The problem is that this will bring inflation. So how can politicians seriously tell voters "these policies will not lead to inflation"? The answer is to rename it. Everyone knows that quantitative easing (QE) = printing money = inflation. So the term QE can no longer be used; it will never appear again because ordinary people on the street know that it means inflation, and people hate inflation, which will lead them to support the Democrats in the next election.

Part 4: The New Face of QE

Host (Kyle Chasse): You are right; policies similar to quantitative easing are just constantly changing names. Looking back in the future, you will find that it is still easing, just that it looked different at the time. So what should we call it this time?

Arthur Hayes: This new name is "Reserve Management Purchases" (RMP).

When this term first appeared, I spent a lot of money consulting researchers in the field of macroeconomics. I asked them, "Is this considered QE?" Most technical monetary market experts said: No, strictly speaking, it is not QE. I asked some bond trader friends, and they also said it is not QE, it is something else. But when you ask some more cynical macro analysts like me, we would say:

Technically it is not, but essentially it is — it will achieve the same effect.

The current market attitude is (represented by Bitcoin, as it is most sensitive to dollar liquidity) that this is not QE, but I believe the market has not really understood what this is. Looking back to 2008-2009, when Ben Bernanke introduced the U.S. version of QE, the market initially did not believe it at all. The S&P continued to decline until it truly bottomed in March 2009.

At that time, Bernanke kept emphasizing that this was just "temporary balance sheet expansion" and would eventually be unwound. But then QE came one round after another, and it wasn’t until 2021 that it truly ended, and the market peaked and significantly corrected at that time. So the key is that the market initially did not believe that QE was printing money until later they realized: "Oh, this is printing money, quick, let’s go!"

Today's RMP is going through the same process. The Fed is buying short-term Treasury bills (T-bills), not MBS or 10-year Treasuries. From a duration perspective, T-bills indeed have a smaller impact, and if you assume that the banking system is the main channel affected by this plan, then RMP is indeed not QE, but that is not the case. The Fed is doing this to induce money market funds to provide more loans in the repo markets, which can directly fund the U.S. Treasury. So this is a way for the Fed to directly use money market funds and the repo market as a medium to finance the U.S. Treasury at the short end of the Treasury curve.

As time goes on, people will see that the deficit has not decreased, the issuance of short-term Treasury bills continues to rise, and the usage of the repo market is growing. By then, asset prices will bottom out and rebound, and the market will realize: "This is actually QE."

Part 5: When Will the Market Bottom?

Host (Kyle Chasse): What do you think the timeline is for the market to realize this? You mentioned that asset prices might bottom during this period; when specifically?

Arthur Hayes: I think starting in January next year, (asset) price performance will significantly improve; but around March, the market will start to worry about whether this "temporary project" will end, and then there will be a round of turbulence; then they will confirm that RMP will continue, and the market will restart.

Part 6: Arthur Hayes' Personal Operations

Host (Kyle Chasse): How would you operate now? How are you personally positioned? Are you leaning towards risk aversion or risk-taking?

Arthur Hayes: We have probably fired 90% of our bullets, with a little cash left to deal with volatility. Maelstrom (Odaily Note: Arthur's family investment office) does not use leverage, so we are not afraid of Bitcoin briefly dropping below 80,000.

What we are more concerned about now is what the next dominant altcoin narrative will be? Setting Bitcoin aside, our most successful altcoin position this round is Ethena (ENA), and we entered very early because we are the financing advisors for that project.

I believe the next wave will be in privacy and ZK-related directions. We currently have a significant exposure to Zcash (ZEC), but I think there will be some related projects in this field that will truly explode and may become the best-performing altcoins in the next two to three years. I believe 2026 is the time to find that project; I don’t know what it is yet, but as investors, our job is to seek opportunities.

Part 7: The Value and Risks of the Privacy Narrative

Host (Kyle Chasse): To be honest, exposing all transactions on-chain for everyone to see is really annoying, right?

Arthur Hayes: What people don’t understand is that they only see what I want them to see. If I want you to see it, you can see it; if I don’t want you to see it, you will never see it.

So, when you see those "wallet tracking tools" on X or other social platforms, please be skeptical about everything you see. That may not necessarily reflect what is actually happening.

But to me, for Zcash and other ZK projects, the core value of the privacy narrative is — if I really need to ensure that no government, no opposing company, and no one is monitoring what I am doing, do I really have the tools to do that now? Clearly, there is a fear underlying this, and what you need to do is leverage that fear. Even if three years from now, it turns out that the hottest "altcoin" of 2026 is completely worthless, that’s okay; you can still make a lot of money before that.

Host (Kyle Chasse): Do you think it’s possible — I know it’s not possible to completely shut it down or ban it — but if the government really tries to say "using this is illegal," that would definitely scare a lot of people away, right?

Arthur Hayes: I think in the current information age, the government has become much smarter. If you tell people "you cannot do something," but you don’t have the means to truly enforce that ban, people will not only continue to do it but will want to do it even more.

Therefore, the government no longer outright bans it but chooses to restrict intermediary services, such as limiting exchanges from listing privacy coins. When I was truly "brainwashed" by Zcash, I first picked up my phone to buy a little, then contacted eight brokers I knew to get quotes for a multi-million dollar trade, and only two were willing to quote, while the other six were prohibited by regulators from trading privacy coins.

Now, most exchanges are not allowed to trade Zcash or other privacy coins at all. This is how the government prevents you from holding it. They don’t directly ban it; they make it extremely difficult for you to obtain it.

Part 8: What If the Prediction Fails?

Host (Kyle Chasse): Based on your previous explanation, your overall judgment for 2026 is bullish. So, are there any key indicators, charts, or events that could overturn this judgment and make you very bearish in 2026-2027?

Arthur Hayes: Some might say that Bitcoin's pullback from 125,000 to 80,000 is just the beginning, and it could drop further, using that to counter my point: "Arthur, you keep saying money will be printed, but Bitcoin is still falling, clearly the market doesn’t believe what you’re saying."

To that, my response is: "You are right."

I am talking about a future state. I am saying the market is currently digesting a new term for "printing money," at least in the U.S. But perceptions can change, and that’s the risk I take with this judgment; the market will validate the answer. If I’m wrong, then I’m wrong, but I have put real money on this judgment. We will witness the outcome together.

Part 9: Will There Be Another Altcoin Season?

Host (Kyle Chasse): Will we see another altcoin season in the next year or two?

Arthur Hayes: I think people have a serious selective memory about "altcoin seasons," filled with many "could have," "should have," and "if only" assumptions.

You say you want an altcoin season? Then think back to 2016-2017, when it was basically some guy posting a ridiculous PDF online and giving an address for you to send money. Did you send it? Most people didn’t, but many did, and they made a ton of money. Then think about the NFT craze of 2020-2021, where everyone was trading some hideous apes and penguins on the blockchain, but you were taught from a young age that masters like Rembrandt and Picasso are the pinnacle of art. Did you go crazy trading NFTs then? Many people did not.

So don’t talk to me about altcoin seasons. You didn’t dare take risks in 2017, you didn’t dare in 2020, and you won’t dare in the Hyperliquid of 2024-2025. Altcoin seasons have always been there; you’re just too scared to participate. What you want is that familiar altcoin season because only then do you feel like you know what to do, but the cycle will refresh, and what rises will always be new things. Either you adjust your cognitive framework, or you will forever live in the past and complain that altcoin seasons don’t exist, but that’s just because you didn’t buy into the rising one.

Part 10: The Big Opportunities in Arthur Hayes' Eyes

Host (Kyle Chasse): Is there anything you are excited about that you haven’t publicly discussed yet? Not the well-known blue chips, but something higher on the risk curve.

Arthur Hayes: I might write an article about this at the New Year. Maelstrom has a bunch of investment professionals, and I have a directional trading account where I can trade whatever I want.

I reviewed my trades this year; overall, it was profitable, but if you look at the statistics, you’ll find that only about one-fifth were profitable, and I lost money on most trades. I threw a lot of money at some of the worst shitcoins or meme coins, but I shouldn’t have touched that garbage; I just thought it was "fun," but that’s not my style; I shouldn’t have been messing around in that crap.

The coins I made the most from were Hyperliquid (HYPE) and Ethena (ENA); just catching those big fluctuations is enough, and fortunately, we have ample capital to place heavy bets on those coins.

One trade I like is ENA — you can check the on-chain records that I allow you to see. I believe ENA is on the verge of a massive surge because this is a game of interest rates. As the Fed lowers short-term rates, if the narrative about RMP is correct, then Bitcoin will rise, and people will want to leverage it; they will be willing to pay a higher basis, and Ethena is the tool to capture that on-chain. Currently, we see USDe undergoing large-scale redemptions, but I believe this trend will reverse, and like in September 2024, we will see ENA experience a very rapid rise. Among the blue-chip coins we hold, this may be one of my strongest convictions; it aligns with my overall macro monetary thesis.

Part 11: Quickfire Questions

Host (Kyle Chasse): Now we move into the quickfire round. By the end of 2026, will Bitcoin be higher, lower, or flat? What price range?

Arthur Hayes: Higher. I previously said 250,000 by 2025, which clearly is unlikely to happen. I will repeat the same target: 250,000 by 2026.

Host (Kyle Chasse): Name a trade that everyone loves but you think is a trap.

Arthur Hayes: Shorting Nvidia.

Host (Kyle Chasse): What is the most dangerous macro narrative in the cryptocurrency space right now?

Arthur Hayes: Central banks tightening monetary policy.

Host (Kyle Chasse): What is the best signal for the return of liquidity?

Arthur Hayes: This requires digging deep into the central bank's balance sheet and the banking system. Signals are never very straightforward because they want to deceive you.

Host (Kyle Chasse): What is your positioning on ETH?

Arthur Hayes: The king of settlement.

Host (Kyle Chasse): What is the most underestimated risk in the market?

Arthur Hayes: Leverage.

Host (Kyle Chasse): If you could, what would you want to ban from the collective sentiment in the crypto market?

Arthur Hayes: Stop thinking that market makers are manipulating prices against you every day.

Host (Kyle Chasse): If someone wants to see those wallets that you "don’t want them to see," what should they do?

Arthur Hayes: Use your imagination, my friend.

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