Original title: Powell Is About To F*CK Crypto Over At Jackson Hole! [Arthur Hayes]
Original source: Crypto Banter
Original translation: Azuma, Odaily Planet Daily
Editor’s note: The industry's favorite market predictor, BitMEX co-founder Arthur Hayes, has come out to predict market trends again. During a podcast discussion on Crypto Banter early this morning, Arthur Hayes shared his insights on topics such as the possibility of interest rate cuts, ETH trends, and altcoin selection.
Below is the full content of the Arthur Hayes podcast discussion, translated by Odaily Planet Daily, with some content removed for reading fluency.
Powell and interest rate cuts, and the market trend for the second half of the year
Host: I saw some tweets you posted earlier, especially this one from August 2: 'The tariff law will take effect in the third quarter; at least the market believes that no major economy can quickly generate enough credit to boost nominal GDP—Bitcoin will test $100,000, while Ethereum will test $3,000...' Could you elaborate on your views regarding the market trend in the second half of the year? I believe Powell must cut rates in September; he seems to be under gunpoint. What do you think?
Arthur Hayes: I don’t think Powell necessarily has to do anything. I’ve discussed this with many macro strategists, and they’ve provided various reasons. Of course, some say the labor market situation; some say the U.S. may have already fallen into recession or will soon fall into recession; others say tariffs will disrupt everything... I understand all this noise, but humans are strange; at some odd junctures, they suddenly decide to have 'principles,' to have 'self-respect,' and 'face.'
If Powell truly feels he is 'Volcker 2.0', then what could prove himself better than resisting Trump's pressure? For example, not cutting rates, insisting on serving his term until May 2026 before stepping down, rather than resigning early. This is completely possible. In this case, a situation may arise where Powell overstays his term while a bunch of Democratic appointees hinder Trump's policies. I don’t know the probability of this situation, but almost no one in the market has seriously considered it.
Of course, this does not mean that the Trump administration cannot find a way to 'print money.' If the government really wants to print money, they can always find a way. So I just remind of the risks; I can’t give a probability.
Clearly, I think we are entering a 'gray area.' Friday is the Jackson Hole summit, and Powell will be speaking. Everyone is looking forward to whether he will reveal the direction for September: will there be a rate cut? Or is the interest rate still not tight, and possibly even higher? No one knows what he will say. The Treasury is still issuing bonds, and the reverse repo balance has reached zero. The market has been a bit weak since the opening this week, for example, ETH has dropped 10%, so I feel this is an uncertain phase.
Will the market at the end of the year be higher than it is now? I think it will be. If you are not leveraged, you really don’t need to care; maybe it will drop another 15%-20% this week, and if you have spare cash, this will be a good bottom-fishing opportunity. I believe that there will definitely be 'money printing' before the end of the year. Bitcoin could surge to $250,000, and ETH could exceed $10,000. But before that, autumn might be quite volatile.
Host: I agree with most of your points, which align with our judgment. There may be a pullback before the end of the year, and then there will be a real climax for the bull market. I will look at the data: CPI lower than expected, PPI higher than expected, employment data revised... The market currently gives an 83% probability that interest rates will be lowered. I think what you said about Powell being a 'principled' person is somewhat valid, but I still tend to believe he will cut rates in September unless there is an unexpected event.
Arthur Hayes: Why is cutting rates considered the 'correct choice'? The data from the U.S. Bureau of Labor Statistics (BLS) is garbage, completely manipulated by partisans. The CPI is also garbage; statistical models can be manipulated at will. Since Trump took office, the head of the BLS has been replaced. This agency will eventually become his megaphone, so Powell can easily say, 'These data are not clear; we need more time and temporarily maintain interest rates at 4.5%.
I just want to remind everyone from another perspective: don't pin your hopes on so-called 'data.' In 2022, everyone said the data pointed to a recession, and Powell had to cut rates, but he directly raised rates by 75 basis points, severely hitting the market. So we could completely replay the scenario of 2022—where the market expects rate cuts, but Powell suddenly delivers a 'hawkish blow,' resulting in a market crash.
Host: Well, I think there will be at least a 25 basis point rate cut in September, even if it's just because he’s fed up with external criticism.
Arthur Hayes: Are you sure? If he really wants to be 'Volcker 2.0', then this is precisely the opportunity to prove himself—resisting the president's overreach and insisting on maintaining the independence of the Federal Reserve.
Host: So what is your baseline judgment? Do you think there will be no rate cuts this year? Or will there be one or two cuts? What is your baseline prediction?
Arthur Hayes: My baseline judgment is—I have no idea. I won’t go heavily invested based on these false data points, which could make it hard for me to exit. You can interpret this data from different angles, but they are all unreliable. I just feel that the market is expecting Powell to cut rates, but no one is seriously considering the possibility of 'Powell sticking to his principles for the first time' and directly telling Trump 'screw you,' choosing not to cut rates during an election year.
Do you remember when Kamala Harris was campaigning? The labor market was good, unemployment was low, inflation was excessive, but the Federal Reserve still cut rates by 50 basis points to help her. Some Federal Reserve officials even openly said, 'The Fed will do everything to prevent Trump from being elected,' although it wasn't Powell himself who said it, but other board members had made clear statements. So now, a similar situation may arise: the market calculates an 83% probability of a rate cut based on the data, but Powell may think, 'The Federal Reserve is above partisan politics, so we won’t cut rates.'
I'm not saying this will definitely happen; I'm just reminding you that it is a possibility. I personally would not trade based on the assumption of 'the Federal Reserve cutting rates by 50 basis points.' Because even if Powell does not cut, the Trump administration has many other ways to stimulate the market. So there may be short-term pain, but this might actually push the Trump administration to use more aggressive and 'unconventional' methods to print money and advance their economic agenda.
Host: So your baseline judgment is: before the end of the year, they will definitely find a way to 'print money'?
Arthur Hayes: That's right. They will definitely do something. I don’t know exactly what means will be used, but I am very sure that if Powell insists on not cutting rates, the government will find a way to 'squeeze out liquidity.'
Short-term and long-term price predictions for ETH
Host: Okay, so you previously said ETH would test $3,000. Do you think ETH will first reach $3,000 and then break the historical high?
Arthur Hayes: I don't think so. At that time, I said ETH would test $3,000 before it broke past $4,000. Later, Jane and I bought some ETH back again. From the chart analysis, it definitely has to go up; we cannot go against the market.
If Powell makes a hawkish speech at Jackson Hole, I think ETH might first retest $4,000.
Host: In this cycle, Bitcoin's price has exceeded its previous high by about 70%, while ETH is still struggling to break its previous high. Do you think ETH will see a similar catch-up rally, rising 70% above its previous high, to $5,000, $6,000, or even $7,000?
Arthur Hayes: I think ETH will reach $10,000 - $20,000. Once it breaks the historical high, the upside will be completely open. Moreover, as digital asset treasury companies continue to raise funds, if the assets they purchase are continuously setting new highs, the fundraising process will become easier, and prices will continue to rise.
This mainly depends on how much funding these companies can raise and how much money the government wants to print. I’m not someone who strictly adheres to the 'four-year cycle.' How long this cycle lasts depends on how they play it.
The Trump administration has not fully entered the 'money printing rhythm.' They are still paving the way, testing various methods to see which will work. They are releasing signals that 'we want to heat up the economy,' throwing out various ideas to see what can be realized. Once the nominees for Federal Reserve Chair and the board members are confirmed, for example, whether Trump can fire Powell and install his own people—that may not be clear until mid-next year.
Once this is established, for the rest of 2026 until the end of Trump's term, they will print money like crazy. Because without printing money, you can’t win the election. The Democrats need to print money, and the Republicans must print money too. Otherwise, his supporters and allies will not benefit; how can he be re-elected?
Host: So you believe this bull market could be extended for a long time. In other words, the traditional four-year cycle theory will fail. Trump's money printing started a bit slowly, but once the policies are fully implemented, could this cycle extend to 2027 or 2028?
Arthur Hayes: That's right.
Host: Wow, that's really amazing. You said ETH can reach $10,000–$20,000, not this year, but in the next three or four years, right?
Arthur Hayes: Yes. But my baseline judgment is that we will definitely have a major bull market, and all financial assets linked to Trump's policies will benefit. Because he must win the election in 2026. The only thing voters care about is their wallets: Am I richer today than I was yesterday? If not, I will vote for someone else. So they chose Trump over Biden; the same logic will apply for the 2026 midterm elections and the 2028 presidential elections.
The Democrats will also clearly shout 'we need to print money,' and if the Republicans do not distribute benefits, they will lose votes. So both sides will desperately release liquidity.
Host: Haha, you're making me want to vote for the Democrats. If they're going to spend money, I only care about the money anyway.
Arthur Hayes: Yes, in the end, it’s about money; political parties don’t matter.
ETH vs SOL
Host: ETH has recently caught Wall Street's big narrative; everything seems like a perfect chain reaction. First, Circle went public, far exceeding expectations, drawing everyone's attention to stablecoins; then, the stablecoin narrative naturally fell on ETH; next, Joseph Lubin and Tom Lee both loudly advocated for ETH; as a result, ETH became Wall Street's new darling. It has become the carrier platform for 'real-world assets.' Moreover, ETH now has prominent leaders; I refer to them as 'Batman and Superman'—Lubin and Tom Lee, one speaks on CNBC daily, and the other is a founding veteran of ETH... My question is: if from now until the end of this cycle, you can only put your money in one asset, would you choose SOL or ETH? Because up until two months ago, everyone was singing the blues for ETH, almost unanimously supporting SOL. Now it suddenly seems to be all about ETH.
Arthur Hayes: To be honest, both will rise. The question is just which one rises more. I am an advisor for Solana projects, so I certainly believe SOL will rise, but ETH is a larger asset, and funds will flow in faster. SOL and ETH will be an interesting race; one may rise faster, but that doesn't mean the other will lose; both will rise.
Host: From a position allocation perspective, would you be more heavily invested in ETH?
Arthur Hayes: Yes, I will focus more on ETH.
Investment logic and collapse risks of crypto treasury companies
Host: Wall Street's attitude shift is indeed astonishing. What do you think about these 'crypto treasury companies'? Some people hesitate about whether to hold ETH directly or buy stocks of these companies, like SBET or BMR, which sometimes trade at 1.8 times or even 2 times net asset value. Would you advise crypto investors to buy these stocks?
Arthur Hayes: This trading logic is simple: you are essentially buying a $1 asset for $2 because you believe in the power of passive index funds. For example, I just had a meeting with the team at UPXI (a Solana treasury company), and I told them to study which indices might include your stocks, what mandatory buying rules fund managers have, average trading volume, market cap, and exchange listings all need to meet standards.
As long as these conditions are met, fund managers must buy your stocks and do not care about what the company is actually doing. This is the MicroStrategy model, also the way Michael Saylor pioneered. They force funds to flow in by entering various indices.
Host: Doesn't this create leverage risks in the market? For example, if you have $1 of ETH but are trading it at $2 in some companies. There is $1 of 'air' in between. In Michael Saylor’s case, he initially used bond and convertible bond money to buy Bitcoin, which could create returns for shareholders while repaying bondholders' principal. But now, the new generation of treasury companies has mostly learned their lesson; they all say, 'We don’t want leverage,' because Michael Saylor has already proven that debt will be called back, while different categories of stocks won’t have this risk. So now I’m confused as to why anyone would pay $2 for a $1 asset? I can hardly find a reasonable explanation.
Arthur Hayes: The answer is simple: because you believe it will enter the index. Passive fund managers do not care about price, do not care about net asset value; if the system requires them to buy, they must buy. They must have all stocks bought before the market closes. Whether it's $1 or $50,000, they don’t care.
Host: I understand, but I still think this is risky. For example, if one day the market crashes, these companies' stock prices drop from 2 times book value to below book value, and no one buys them anymore. By then, they will lose their meaning of existence and can only liquidate their underlying assets, leading to a 'deleveraging collapse' in the crypto market.
Arthur Hayes: (Collapse) theoretically this is possible, but in reality, it’s not that easy. Because these are not ETFs; they are companies. If the company's management wants to 'stubbornly resist,' you first need to buy enough shares, hold a shareholder meeting, and force them to liquidate. This process is very expensive and time-consuming, and may take years, and also involve lawsuits.
So I am not too worried about so-called 'chain collapses.' Unlike ETFs that can be redeemed on the same day, treasury companies are more complex.
Host: But do you agree that by the end of this cycle, there will be many opportunities to buy these companies at very low prices, just like when Grayscale was at a 50% discount back in the day?
Arthur Hayes: Yes, but at that time you will have to spend a long time and significant costs to truly realize the arbitrage.
Host: What I worry about is that not every team is Michael Saylor. When some companies can’t hold on anymore and start liquidating their crypto assets, that will be the end of this cycle.
Arthur Hayes: I agree. At that time, some treasury companies might be acquired at a discount to net asset value or directly liquidate assets. The leading projects will passively absorb capital, while the laggards will be eliminated.
Host: Which assets do you think Wall Street will be interested in and worth them setting up treasury companies? Obviously, BTC, ETJ, and SOL all have potential. I also see treasury companies around BNB, TON, HYPE, and ENA. How far do you think this trend will develop? Will it cover the top 100 tokens? Or the top 20 tokens? How much interest do you think Wall Street currently has in cryptocurrencies?
Arthur Hayes: As long as the market keeps rising—I don't know how much the bankers take in these trades, but sponsors definitely take 3%, 4%, or 5%—this is a great business for investment banks; as long as it is profitable, they will build treasury companies for all assets.
The selection and logic of altcoins
Host: Let's talk about altcoins. The last time I saw you during the Dubai 2049 event, you told me to buy ETHFI, and it ended up buying me a new house and paying for my child's tuition. So what altcoins are you looking at now? For example, Ethena (ENA), do you still hold it in high regard? Their stablecoin issuance has doubled from $6 billion to $12 billion, and with market rates rising, the protocol's yield has also recovered. It seems like they have done many things right.
Arthur Hayes: Yes. I have a macro logic on stablecoins. Next week I will be speaking at Japan's WebX, and I will also publish an article then. My point is that people's imagination about stablecoins is still not big enough. The U.S. Treasury Secretary will use stablecoins to reverse the trend of 'de-dollarization'—that is, to bring back the global offshore dollar flow to the U.S., while providing banking services to so-called 'global south countries' (mainly developing countries located in Asia, Africa, and Latin America), even if local regulations do not allow it.
Stablecoin issuers need to make money from interest spreads, so they will use users' funds to buy U.S. Treasury bonds. Suppose by 2028, the circulation of U.S. dollar stablecoins reaches $10 trillion; what does that mean? I will elaborate on this part in my article.
The model of Ethena is to package the 'funding spread' in the crypto market into a self-yielding stablecoin. Essentially, you are lending money to speculators (those who are long) and then earning returns. This trading model has existed in the crypto market for over a decade; it’s just that the Ethena team has packaged it as a DeFi product that everyone can conveniently participate in.
So I believe Ethena can earn over a hundred million dollars in interest income annually through this path. When they start buying back tokens, and ETH is surging, then the price of ENA will definitely skyrocket. My prediction is that Ethena will surpass Circle within the next 12 months, becoming the second-largest stablecoin after Tether.
Host: That's a bold prediction. Hearing your analysis, I also agree. Let me ask again, in reality, there will be a bunch of stablecoins, like PayPal USD, USDT, USDC, Ethena, Stripe's stablecoin. Why would people keep exchanging back and forth? In what scenarios would you exchange USDT for USDC or PayPal USD?
Arthur Hayes: Actually, the key is not the exchange but the distribution. Social media platforms are the 'tip of the spear.' Who will open accounts for those who have not yet accessed dollars? The answer is Facebook (Meta) and X (Musk's Twitter); they will launch wallets. At that time, which stablecoin gets chosen will depend on the distribution capability of these platforms.
Host: You didn't mention Telegram? It has 1 billion users.
Arthur Hayes: In my view, Telegram's chain is somewhat fake, lacking real activity and has legal troubles. I don't think the U.S. government will give the distribution rights of 'U.S. dollar policy' to Telegram. It’s more likely to be given to capitalists like Musk and Zuckerberg, who pay taxes, donate, and are controlled.
For example, Filipinos are eager to use dollars, but local regulations don’t allow Citibank or JPMorgan to serve them directly. The Trump administration could support WhatsApp to launch 'USDT payments,' allowing Filipinos to receive dollar remittances directly through WhatsApp. This kind of 'dollarization' cannot be stopped by anyone.
Once everyone has stablecoins, the next step is to spend money. For example, buying coffee at 7-11, swiping cards at convenience stores; domestic bank cards might not work overseas, but Ether.fi works very well. I have the Etherfi app on my iPhone and a physical card that I can swipe anywhere. Once hundreds of millions or billions of people get US dollar stablecoins through Facebook and X, they will also need spending scenarios. Ether.fi can meet this demand and spend the stablecoins.
Host: Okay, so what about Hyperliquid? What is your logic?
Arthur Hayes: I believe Hyperliquid will become the largest exchange in the world, surpassing Binance. Because once stablecoins become popular, a large number of new users will enter, and their only way to combat inflation will be speculation, and the place to speculate will be on-chain derivatives exchanges. Hyperliquid provides low-cost, high-liquidity contracts and buys back 97% of profits in tokens, directly benefiting users.
For example, when a project is about to go live, it generally has to pay 7%-10% of tokens to centralized exchanges (like Binance) as listing fees, but on Hyperliquid, it costs almost nothing, and they can immediately have liquidity. This way, the project side has no need to 'give away' tokens to centralized exchanges. Thus, Hyperliquid will gradually occupy the new issuance market.
Host: I understand. In the past, to earn more returns, I would invest in smaller altcoins, but this time I chose to focus on leading projects like ENA and LINK, and then add a bit of leverage. I feel this presents a better risk-reward ratio.
Arthur Hayes: Yes, I am also only investing in projects that can bring real cash flow now. I am no longer pursuing a thousandfold return because that means enduring a bunch of projects going to zero; I just want to hold on comfortably after big funds come in. For example, Hyperliquid is buying back 97% of its profits in tokens, EtherFi has already started buybacks, and Ethena will soon do the same. The profits from these protocols will be directly distributed to us token holders instead of being intercepted by the protocol teams.
Host: What about Chainlink? Recently, it has also suddenly become a new darling of Wall Street; is it on your radar?
Arthur Hayes: Honestly, I don't pay much attention. I haven't done extensive research on oracles and am not sure if their current positioning is still just to make oracles.
NFTs and CryptoPunks
Host: Okay, before I let you go, I have to tell you that I finally bought a CryptoPunk, even though I previously said 'I would never buy one,' but that day you and Raoul Pal were saying that CryptoPunks would outperform ETH, and I couldn't help but buy one. Do you still hold it in high regard?
Arthur Hayes: Of course. Because aside from survival essentials, everything humans do is an 'identity game.' In reality, identity symbols are artworks, luxury cars, and big houses; online identity symbols are these scarce digital collectibles with stories. CryptoPunks is the most representative NFT project; its status is irreplaceable. So I must hold onto CryptoPunks; it will always be the 'first,' and CryptoPunks have good liquidity; it is the most marketable series among NFTs.
When ETH rises to $20,000, there will be many wealthy people needing to flaunt their status. They might not show off branded belts but will say, 'Look, I have a CryptoPunk, a pixel avatar I bought for a few million.' This is the new status symbol.
……
The following are personal life discussions and greetings, which will not be translated here; those interested can watch the original video directly.
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