With the United States Federal Reserve (Fed) planning to cut rates this Wednesday, former BitMEX CEO Arthur Hayes expects the announcement to have a negative impact on cryptocurrency prices.
Arthur Hayes: By lowering rates, the Fed will cause a fall in the price of cryptocurrencies
This Wednesday, The United States Federal Reserve (Fed) will begin its monetary easing cycle and initiate a rate cut, 4 years after the previous decline. According to Arthur Hayes, the co-founder of BitMEX, The Fed's official announcement is expected to impact the price of risk assets, including cryptocurrencies.
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For Maelstrom's investment director, The launch of this monetary easing cycle is a mistake that will cause a fall in cryptocurrencies and a strengthening of the yen, Japan's fiat currency:
Lowering Rates Is a Bad Idea
because inflation is still a problem in the United Stateswith the government being the main contributor to persistent price pressures. If you make borrowing cheaper, it contributes to inflation.. […] Also, the interest rate gap between the United States and Japan will be reduced with the Fed's rate cut. This could lead to a strong appreciation of the yen and trigger the unwinding of carry trades on the yen.
“The USD/JPY pair [dollar américain/yen, ndlr] is the only thing that matters in the short term ” for Arthur Hayes. The American entrepreneur then referred at the outcome of the highly prized yen carry trade which took place at the beginning of last month.
So, The Bank of Japan raised its benchmark interest rate last July from 0% to 0.25%.. As Arthur Hayes points out, it was during this period that the bitcoin price The price of BTC has gone down dropping from around $64,000 to just $50,000.
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Is the era of central banks over?
Former BitMEX CEO also tends towards a weakening of demand for tokenized Treasury bonds, the latter being seen as products sensitive to variations in interest rates.
Following this, Arthur Hayes returned to analyst Russell Napier's commentsThe latter has repeatedly stated that governments of developed countries, focused on reducing the debt/gross domestic product ratio, have taken control of the money supply, thereby making central banks ” useless » in the near future.
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For Russel Napier, by targeting certain sectors such as manufacturing, governments will generate strong liquidity while keeping inflation high. Arthur Hayes claimed to be ” 100% agree with this prediction » and specifies:
The era of central banks is over. Politicians are going to take over and ask banks to create liquidity in specific sectors of the economy. So you're going to see loose and tight capital controls in different places, meaning that cryptocurrencies are the only asset you can own that is globally portable and allows you to exit this system.
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Source: CoinDesk
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Surprised by the rise of crypto-assets in the late 2010s, I started to closely follow this sector that fascinates me to the highest degree. When I am not in football stadiums, rugby or handball halls, I work on writing relevant articles about cryptocurrencies and more broadly, Web3.
Zacharie Tazrout
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