Editor's Note: The well-known cryptocurrency-themed interview channel The Rollup has updated the latest episode's dialogue today. The guests this time are Arthur Hayes, the co-founder of BitMEX, who has recently had a good track record in market predictions, and Mike Silagadze, CEO of ether.fi, who has just launched a $40 million fund. The interview covers multiple topics including market predictions, ETH/Bitcoin price performance, Bitcoin and gold, and fundamental analysis.
The following are excerpts from this interview (focusing on Arthur Hayes's remarks), translated by Odaily Planet Daily.
Image source: Odaily Planet Daily
Q1: Has the pullback ended?
Arthur Hayes: I believe the market has absolutely bottomed out around $74,500. At that time, Trump's team took an extreme stance on tariffs, but under pressure from the financial market crash, they had to choose to compromise — after all, Trump's team also faces pressure from the midterm elections in 2026.
So the market has hit bottom, money has returned, and Bitcoin has rebounded by about 25%. Remember the market low after the FTX collapse in 2022? At that time, Yellen chose to reduce the reverse repurchase from $250 million to zero, and afterward, Bitcoin rose nearly sixfold. I believe we will see a similar rising pattern, marking the beginning of Bitcoin's journey to $1 million.
Q2: How long can market liquidity and positive sentiment last? Is the rise still related to interest rate cut expectations driven by Trump?
Arthur Hayes: Being overly focused on interest rate cuts is somewhat misguided. People always want to apply the experiences of 2008-2019 — as soon as quantitative easing was introduced, the Fed printed money weekly, and we bought assets, which guaranteed profits. This has become a conditioned reflex in the financial markets, but the rules of the game have changed. When the general public realizes that quantitative easing means inflation, which will affect the ruling party's election prospects, the policy toolbox must be updated. Yellen's actions at the end of 2022 are a typical case — although not nominal QE, it created liquidity through some form, pushing the stock market, cryptocurrencies, and gold to surge in the following 18-24 months, until Trump assumed office.
Yet people are still waiting for Powell to cut interest rates or restart QE, which is completely like carving a boat to seek a sword.
Currently, the U.S. Treasury is implementing a bond buyback plan. While it isn't as straightforward as QE, it essentially provides leverage for bond buyers. As the government deficit expands, trillions of dollars in new debt will flood the market, meaning liquidity is still being injected, just under a different guise. If you wait for a traditional QE signal to enter the market, you might still be watching when Bitcoin rises to $500,000.
The data that truly needs attention is volatility, especially the bond market volatility index (MOVE). When this index breaks through 140, the legislature must intervene: for example, on April 8, when it hit 172 intraday, JPMorgan CEO Dimon immediately criticized Trump's tariff policy on television, and Trump quickly changed course; after the MOVE broke 140 in September 2022, Yellen swiftly adjusted the bond issuance structure, and the market rebounded in response. History has repeatedly shown that as leverage in the financial system rises, the threshold for legislative intervention is decreasing.
Trump, as a 'volatility maker,' is actually a positive for Bitcoin. He often uses the strategy of 'extreme pressure - probing reactions - quick turnaround'; this unpredictability is exactly what the crypto market thrives on. We don't need to predict policy directions; as long as volatility rises, we can make money — because the highly leveraged financial system simply cannot withstand extreme fluctuations.
Q3: Is the rise of gold similarly fierce? Do Bitcoin and gold share the same logic of increase?
Arthur Hayes: I believe gold and Bitcoin are different expressions of the same phenomenon; only the purchasing groups are different.
Ultimately, I believe you hold gold because central banks will buy gold, and you hold Bitcoin because the global retail crowd will buy Bitcoin. What they want to escape is the same thing — excessive inflation and the potential collapse of the post-war fiat financial system.
Q4: Why does debt refinancing inject liquidity into the system?
Arthur Hayes: The key is to understand how 'basis trading' works. Hedge funds profit from the spread between cash bonds and futures contracts, overlaying high leverage arbitrage. With the Treasury relaxing bank capital requirements, these funds can participate in Treasury auctions with higher leverage. Although the Treasury's buyback plan itself does not create liquidity, it maintains the operation of the Treasury market, allowing continuous issuance of bonds — against the backdrop of a 22% surge in the deficit rate (the first six months of fiscal 2024 compared to the same period last year), this mechanism essentially maintains liquidity supply through financial engineering.
Q5: Which tokens can outperform Bitcoin? Will they be those with real cash flow?
Arthur Hayes: This reminds me of Buffett's famous saying: 'Price is what you pay, value is what you get.'
The key to this question depends on the entry price — if you buy ether.fi at $0.55 (Note: Another guest in the interview is ether.fi CEO Mike Silagadze), and assuming the vision described by Mike materializes, it could potentially outperform Bitcoin. But if you buy at an inflated price, even if the project generates $1 billion in revenue, the percentage return from that baseline will be hard to compete with Bitcoin.
Any asset could potentially outperform Bitcoin, but it depends on two variables: the buying price range and the income growth curve during the holding period. There are many undervalued cash flow tokens that indeed have explosive potential when the 'altcoin season' or 'fundamental season' arrives (i.e., the peak phase of Bitcoin's dominance).
Q6: Has Bitcoin's market share peaked?
Arthur Hayes: I don’t think so.
Institutional investors and family offices are now experiencing a cognitive awakening — Trump has shattered the illusion of 'American exceptionalism,' exposing the essence of this empire's priority to care for the fundamental voter base rather than capital security.
This group of funds will start to understand the significance of Bitcoin's existence; they will increase their holdings in gold, reduce their holdings in Nasdaq and US Treasuries, and allocate assets that are decoupled from the current system. This migration will first focus on Bitcoin rather than other tokens — the wealthy will not start by buying altcoins.
Q7: I heard Maelstrom (Arthur Hayes's fund) is doing some M&A work to consolidate new crypto businesses?
Arthur Hayes: We are operating a small M&A fund. There are some cash flow positive crypto businesses that traditional investors misunderstand for various reasons.
We have a lot of flexibility in capital deployment because it's all my own money, with no investment memorandum (PPM) restrictions. We are looking at several companies and may leverage buy one of them, acting as a sponsor to improve their business. The crypto industry has many niche high cash flow businesses that may not be pure blockchain businesses but service providers that traditional private equity market investors do not prefer because they are not high-growth potential companies like Coinbase. But assuming this industry will grow, we need certain services that only crypto-native institutions can provide.
Q8: What are your criteria for screening assets at this stage?
Arthur Hayes: First, I am looking for protocols or businesses that users pay real money to use — not incentivized by tokens, but users actually spending stablecoins or other cryptocurrencies to purchase services. The most typical example is exchanges, like Hyperliquid, which is a model that achieved 10-20% market share in perpetual contracts from zero in just 18 months. They have built an extremely efficient order book system, with user fees directly used for token buybacks; this simple and straightforward business model makes sense.
The second key point is how token holders benefit. Currently, many projects that are highly profitable (like some top DEXs) do not share any profits with token holders. Take Uniswap as an example — no matter how much the protocol earns, holding $UNI is useless, which is why I don’t pay attention to its price at all. If a project relies on token issuance for financing and, after its success, does not allow the community to share the profits, that is simply a scam.
My core criteria for investing in tokens are very clear: First, there must be real paying users; second, a clear profit distribution mechanism must be established — whether through buybacks, dividends, or other forms. Only then can I calculate the expected APY, conduct cash flow discount analysis, and judge whether the current valuation is reasonable. I have been patiently laying out these types of projects for the past month and a half because the market's irrational sell-off created a great buying opportunity — just because they are 'not Bitcoin' led to excessive selling, which in turn created golden pits for those strong cash flow protocols.
This article is reproduced with permission from: (Deep Tide TechFlow)
Original author: The Rollup
'BitMEX Founder: Bitcoin has hit bottom and will surge to $1 million! Why is the US Treasury buyback key?' This article was first published in 'Crypto City.'
