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 most fond of predicting market trends, industry giant and BitMEX co-founder Arthur Hayes has once again predicted market trends. During his participation in the Crypto Banter podcast discussion early this morning, Arthur Hayes shared his insights on potential rate cuts, ETH trends, altcoin selections, and more.
The following is the complete content of the podcast discussion with Arthur Hayes, compiled by Odaily Planet Daily. For the sake of reading fluency, some content has been trimmed.
Powell, rate cuts, and the market trend for the second half of the year
Host: I saw some tweets you posted before, especially one on August 2: 'The tariff law will take effect in the third quarter, and the market believes that no major economy can quickly create enough credit to boost nominal GDP – Bitcoin will test $100,000, and Ethereum will test $3,000...' Please elaborate on your view of the market trend for the second half of the year? I believe Powell must cut rates in September; he seems to have a gun to his head. What do you think?
Arthur Hayes: I don’t think Powell has to do anything. I’ve discussed with many macro strategists, and they have offered various reasons. Of course, some might talk about the labor market situation; others might say the U.S. may already be in a recession or will soon enter one; others may say tariffs will disrupt everything... I understand all this noise, but humans are strange. At some peculiar junctures, people suddenly decide to have 'principles', to have 'dignity' and 'face'.
If Powell really sees himself as 'Volcker 2.0', what better way to prove himself than to withstand Trump's pressure? For example, not cutting rates and insisting on serving his term until May 2026 before stepping down instead of resigning early. This can completely happen. In that case, a situation could arise – Powell overstaying his term, combined with a bunch of Democratic-appointed board members obstructing Trump's policies. I don't know the probability of this happening, 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 will always find a way. So I just want to remind about 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 speak. Everyone is expecting him to reveal the direction for September: will there be a rate cut? Or is the rate still not considered tight, or even possibly higher? No one knows what he will say. The Treasury is still issuing debt, and the reverse repo balance has already zeroed out. The market opened weakly this week; for example, ETH dropped 10%, so I think this is an uncertain phase.
Will the market at the end of the year be higher than it is now? I believe it will. If you are not leveraged, you really don't have to worry; maybe it will drop another 15%-20% this week, which would be a good bottom-fishing opportunity if you have spare cash. I believe there will definitely be 'money printing' before the end of the year. Bitcoin could surge to $250,000, and ETH might exceed $10,000. But before that, the fall might be relatively turbulent.
Host: I agree with most of your points, which also aligns with our judgment. There may be a wave of correction before the end of the year, and then it will be the real peak of the bull market. I will look at the data: if CPI is lower than expected, PPI is higher than expected, and employment data is revised... Now the market gives an 83% probability that interest rates will be cut. I think your point that Powell is a 'principled' person has some truth, but I still tend to believe he will cut rates in September unless something unexpected happens.
Arthur Hayes: Why is cutting rates the 'right choice'? The data from the U.S. Bureau of Labor Statistics (BLS) is garbage, completely manipulated by partisanship. The CPI is also garbage; statistical models can be manipulated at will. Since Trump took office, the head of the BLS has been replaced, and this agency will eventually become his megaphone, so Powell can easily say: 'This data is unclear, we need more time, and will temporarily maintain the interest rate at 4.5%.'
I just want to remind everyone from another perspective: don't place your hopes on so-called 'data'. In 2022, everyone said the data pointed to a recession, and Powell had to cut rates. Instead, he raised rates by 75 basis points, hitting the market hard. So it is entirely possible for us to replay the situation of 2022 – the market expects rate cuts, but Powell suddenly delivers a 'hawkish punch', resulting in a market crash.
Host: Well, but I think there will at least be a 25 basis point cut in September, even if it’s just because he’s tired of the external criticism.
Arthur Hayes: Are you sure? If he really wants to be 'Volcker 2.0', this is precisely his opportunity to prove himself – to withstand the President's overreach and uphold the independence of the Federal Reserve.
Host: So what is your benchmark judgment? Do you think there will be no rate cuts this year? Or will there be one or two cuts? What’s your baseline prediction?
Arthur Hayes: My benchmark judgment is – I have no idea. I won’t take heavy positions based on these false data points that could trap me. You can interpret these data from different angles, but they are all unreliable. I just feel that the market expects Powell to cut rates, but no one seriously considers the situation where 'Powell insists on principles for the first time' and directly tells Trump 'get lost', holding rates steady in an election year.
Do you remember when Kamala Harris was campaigning? The labor market was great, unemployment was low, inflation was high, but the Federal Reserve still cut rates by 50 basis points to help her. Even some Federal Reserve officials publicly stated, 'The Federal Reserve will do everything to prevent Trump from being elected', although it wasn't Powell saying this, other board members have clearly stated so. Therefore, a similar situation may arise now: the market calculates an 83% probability of a rate cut, but Powell might think: 'The Federal Reserve is above party politics, so we won’t cut rates.'
I'm not saying this will definitely happen; I just want to remind that this is a possibility. Personally, I would not trade based on the assumption of 'the Federal Reserve cutting rates by 50 basis points'. Because even if Powell does not cut rates, the Trump administration still has many other methods to stimulate the market. So there may be short-term pain, but this may instead push the Trump administration to use more aggressive and 'unconventional' means to print money to advance their economic agenda.
Host: So your benchmark judgment is: before the end of the year, they will definitely find a way to 'print money'?
Arthur Hayes: Exactly. They will definitely do something. I don't know exactly which means they will use, but I'm very sure that if Powell insists on not cutting rates, the government will find ways to 'squeeze out liquidity'.
Short-term and long-term price predictions for ETH
Host: Okay, so you mentioned ETH would test $3000. Do you think ETH will reach $3000 first before breaking the historical high?
Arthur Hayes: I don’t think so. When I said ETH would test $3000, it was before it broke $4000. Later, I bought back some ETH with Jane. From a chart analysis perspective, it is definitely going to rise; we cannot go against the market.
If Powell gives a hawkish speech at Jackson Hole, I think ETH might first test $4000.
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 have a similar chasing market, rising by 70% above its previous high, reaching $5000, $6000, or even $7000?
Arthur Hayes: I think ETH will reach $10,000 – $20,000. Once it breaks the historical high, the upward space will be completely opened. Coupled with digital asset treasury companies continuously raising funds, if the assets they purchase keep reaching new highs, the fundraising process will be easier, and prices will continue to push upward.
This mainly depends on how much these companies can raise and how much the government wants to print. I'm not the type to stick 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' yet. They are still paving the way, testing various methods to see which one works. They are sending signals that 'we want to heat up the economy', throwing out various ideas to see what can be implemented. Once the candidates for Federal Reserve Chair and board members are confirmed, like whether Trump can fire Powell and place his own people – this may not become clear until the middle of next year.
Once this is confirmed, for the rest of 2026 until Trump's term ends, they will print money like crazy. Because without printing money, you cannot win the election. The Democrats need to print money, and the Republicans also have to print money. Otherwise, his supporters and allies won’t get benefits, how can he be re-elected?
Host: So you think this bull market may be extended. In other words, the traditional four-year cycle theory will fail. Trump's money printing started a bit slowly, but once the policies fully kick in, this cycle may extend to 2027 or 2028?
Arthur Hayes: Exactly.
Host: Wow, that’s really amazing. You said ETH could reach $10,000–$20,000, not this year, but in the next three to four years, right?
Arthur Hayes: Yes. But my benchmark 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 concern for voters is their wallets: Am I richer today than I was yesterday? If not, I will vote for someone else. That's why they chose Trump over Biden, and the logic will be the same for the 2026 congressional elections and the 2028 presidential election.
The Democrats will also clearly shout 'we need to print money', and if the Republicans do not issue benefits, they will lose votes. So both sides will desperately pump liquidity.
Host: Haha, you’re almost making me want to vote for the Democrats. If they are going to spend money, I only care about the money.
Arthur Hayes: Yes, in the end, it’s all about money; party affiliation doesn'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, which exceeded expectations, drawing everyone's attention to stablecoins; then, the stablecoin narrative naturally shifted to ETH; followed by Joseph Lubin and Tom Lee both publicly bullish on ETH; as a result, ETH has become the new darling of Wall Street. It has become the platform for 'real world assets'. Furthermore, ETH now has prominent leading figures, whom I call 'Batman and Superman' – Lubin and Tom Lee, one who speaks daily on CNBC 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 just two months ago, everyone was bearish on ETH, almost unanimously supporting SOL. Now it suddenly seems that ETH dominates.
Arthur Hayes: To be honest, both will rise. The question is which one rises more. I am a project advisor for Solana, so I obviously believe SOL will rise, but ETH is a larger asset with faster inflows. SOL and ETH will be an interesting competition; one may rise faster, but that doesn’t mean the other will lose; they will both rise.
Host: From a position allocation perspective, would you be more heavily invested in ETH?
Arthur Hayes: Yes, I will lean more towards ETH.
Investment logic and collapse risks of crypto treasury companies
Host: Wall Street's shift in attitude is indeed astonishing. What do you think about these 'crypto treasury companies'? Some people hesitate 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: The trading logic is simple; you are essentially spending $2 to buy an asset worth $1 because you believe in the power of passive index funds. For example, I just had a meeting with the team from UPXI (a Solana treasury company), and I told them to research which indices might include their stocks, what mandatory buying rules fund managers have, and that average trading volume, circulating market value, and listing exchanges must meet the standards.
As long as these conditions are met, fund managers must buy your stock, regardless of what the company is actually doing. This is the MicroStrategy model, and it’s the game that Michael Saylor pioneered. They force capital inflows by entering various indices.
Host: Doesn't this create leveraged risks in the market? For example, you have $1 of ETH, but it is driven up to $2 in some companies. Then there is $1 of 'air' in between. In the case of Michael Saylor, he initially bought Bitcoin with money from bonds and convertible bonds, which could still generate returns for shareholders while returning the principal to bondholders. But now, most of the new generation treasury companies have learned and all say 'we don’t want leverage', because Michael Saylor has already proven that debt will be recalled, while different classes of stock will not have this risk. So what confuses me now is, why spend $2 on an asset worth $1? I find it hard to find a reasonable explanation.
Arthur Hayes: The answer is simple: because you believe it will be included in the index. Passive fund managers do not care about price, do not care about net asset value; the system requires them to buy, so they must buy. They must have all the stocks bought up before the market closes. Whether it’s $1 or $50,000, they don’t care.
Host: I understand, but I still think there are risks. For example, if one day the market crashes, and the stock prices of these companies fall from 2 times net value to below net value, no one will buy them anymore. At that point, they will lose their meaning of existence and can only sell off their underlying assets, leading to a round of 'deleveraging collapse' in the crypto market.
Arthur Hayes: (Crash) Theoretically, this is possible, but it is not that easy in practice. Because these are not ETFs, but companies. If the company's management wants to 'tough it out', you must first buy enough shares, convene a shareholder meeting, and force them to liquidate. This process is very expensive and time-consuming, possibly taking years, and may involve lawsuits.
So I am not too worried about the so-called 'chain collapse'. 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?
Arthur Hayes: Yes, but at that time you will have to spend a long time and a great cost to truly realize the arbitrage.
Host: What worries me is that not every team is Michael Saylor. When certain companies can’t hold on and start liquidating and selling off crypto assets, that will be the end of this cycle.
Arthur Hayes: I agree. At that time, some treasury companies may be acquired at a net asset discount or directly liquidate their assets. Those leading projects will passively absorb capital, while the laggards will be eliminated.
Host: Which assets do you think can catch Wall Street's eye, worthy of them setting up treasury companies? Clearly, BTC, ETJ, and SOL all have potential. I've also seen treasury companies around BNB, TON, HYPE, ENA. How far do you think this trend will develop? Cover the top 100 tokens? Or the top 20 tokens? How interested do you think Wall Street is in cryptocurrencies right now?
Arthur Hayes: As long as the market continues to rise – I don’t know how much bankers specifically take from these trades, but underwriters definitely get 3%, 4%, or 5% – this is great business for investment banks. As long as there's profit to be made, 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 allowing me to buy a new house and pay for my child's tuition. What altcoins are you looking at now? For example, Ethena (ENA), are you still optimistic about it? Their stablecoin issuance has doubled from $6 billion to $12 billion, and with market rates rising, the protocol yield has also rebounded. It seems like this project has done many things right.
Arthur Hayes: Yes. I have a macro logic regarding stablecoins, and I will be speaking at Japan's WebX next week, and I will also publish an article then. My point is that people's imagination about stablecoins is not big enough. U.S. Treasury Secretary Janet Yellen will use stablecoins to reverse the trend of 'de-dollarization' – that is, to bring the global offshore dollar flow back 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. Treasuries. Suppose by 2028, the circulation of dollar stablecoins reaches $10 trillion; what does that mean? I will elaborate on this part in the article.
Ethena's model is to bundle the 'funding spreads' in the crypto market into a self-yielding stablecoin. Essentially, you are lending money to speculators (those going long) and then earning returns. This trading model has existed in the crypto market for over a decade; the Ethena team just packaged it as a DeFi product, making it easy for everyone to participate.
So I believe Ethena can earn hundreds of millions of dollars in interest income through this path each year. Once they start repurchasing tokens, and ETH is surging, the price of ENA will definitely fly. My prediction is that Ethena will surpass Circle in the next 12 months, becoming the second-largest stablecoin after Tether.
Host: This is a bold prediction. From 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 everyone keep exchanging them? In what scenarios would you exchange USDT for USDC or for PayPal USD?
Arthur Hayes: The key is not the exchange, but the distribution. Social media platforms are the 'sharp end'; who will open accounts for those who have not yet accessed dollars? The answer is Facebook (Meta) and X (Musk's Twitter), which will launch wallets. At that time, which stablecoin can be chosen will depend on the distribution capabilities of these platforms.
Host: You didn't mention Telegram? It has 1 billion users.
Arthur Hayes: The Telegram chain seems a bit fake to me, with no real activity and legal troubles. I don't think the U.S. government will hand over the distribution rights of 'dollar policy' to Telegram. It is more likely to be given to American capitalists like Musk and Zuckerberg, who pay taxes, donate, and are controlled.
For example, Filipinos really want to use dollars, but local regulations do not allow Citibank or JPMorgan to serve them directly. So 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.
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 may not work overseas, but Ether.fi is very useful. I have the Etherfi app on my iPhone and a physical card, which I can swipe anywhere. Once hundreds of millions or billions of people get dollar stablecoins through Facebook and X, they will also need spending scenarios. Ether.fi can meet this demand, allowing stablecoins to be spent.
Host: Well, what about Hyperliquid? What’s your logic on this?
Arthur Hayes: I believe Hyperliquid will become the largest exchange in the world, surpassing Binance. Because once stablecoins become widespread, a large number of new users will enter, and their only way to combat inflation will be through speculation, with on-chain derivatives exchanges being the venue for that speculation. Hyperliquid offers low-cost, high-liquidity contracts and repurchases 97% of profits to return directly to users.
For example, when a project is about to launch, typically, they need to pay 7%-10% of the tokens to centralized exchanges (like Binance) as a listing fee, but on Hyperliquid it costs almost nothing and they can have liquidity immediately. This way, project parties have no need to 'give away' tokens to centralized exchanges. Thus, Hyperliquid will gradually occupy the market for newly issued tokens.
Host: I understand. In the past, to earn higher returns, I would invest in some small-cap altcoins, but this time I choose to focus on the top projects like ENA and LINK, and then add a bit of leverage. I think this way has a better risk-reward ratio.
Arthur Hayes: Yes, I am also only investing in projects that can generate real cash flow. I no longer pursue thousand-fold returns because that means dealing with a bunch of projects that could go to zero. I just want to hold comfortably once large funds come in. For example, Hyperliquid repurchases 97% of its profits back into tokens, EtherFi has already started to repurchase, and Ethena will also start soon. The profits from these protocols will be directly distributed to us token holders, not withheld by the protocol teams.
Host: I agree with your logic. What about Chainlink? Recently it has suddenly become the darling of Wall Street; is it on your radar?
Arthur Hayes: Honestly, I’m not paying much attention to it. I haven’t done much in-depth research on oracles, and I’m not sure if their current positioning is still just about being 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 will never buy it'. That day you and Raoul Pal were saying CryptoPunks would outperform ETH, and I couldn't help but buy it. Do you still have a positive outlook?
Arthur Hayes: Of course. Because everything humans do, aside from essential survival needs, is an 'identity game'. In reality, symbols of identity are artworks, luxury cars, and large houses; on the internet, the symbols of identity are these scarce, story-laden digital collectibles. CryptoPunks is the most representative NFT project, and its status is irreplaceable. So I must hold CryptoPunks; it will always be the 'first', and CryptoPunks has good liquidity, being the most marketable series in NFTs.
When ETH rises to $20,000, there will be many wealthy individuals wanting to flaunt their identity. They may not show off designer belts but will say: 'Look, I have a CryptoPunk, which I bought for millions as a pixelated avatar.' This is the new symbol of identity.
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The following is a discussion about personal life and pleasantries, and will not be translated here. Interested parties can watch the original video directly.
