Article reprinted from: Odaily Planet Daily
Author: The Rollup
Source: The Rollup X account
Translation: Azuma, Odaily Planet Daily
Editor's Note: The well-known cryptocurrency-themed interview channel The Rollup has updated its latest episode today. The guests this time are BitMEX co-founder Arthur Hayes, who has been quite successful in market predictions lately, and Mike Silagadze, CEO of ether.fi, who just launched a $40 million fund. The interview covers various topics including market predictions, ETH/BTC price performance, BTC and gold, and fundamental analysis.
Below are some excerpts from this interview (focusing on Arthur Hayes's remarks), translated by Odaily Planet Daily.
Q1: Has the pullback ended?
Arthur Hayes: I believe the market absolutely bottomed out around $74,500. At that time, the Trump team took an extreme stance on tariffs, but under pressure from the financial market crash, they had to choose to compromise—after all, the Trump team also faces the pressure of the 2026 midterm elections.
So the market has bottomed out, funds have returned, and Bitcoin has rebounded by about 25%. Do you remember the market low after the FTX explosion in 2022? At that time, Yellen chose to lower the reverse repo from $250 million to $0, and then Bitcoin rose nearly sixfold; I believe we will see a similar upward pattern, marking the beginning of Bitcoin's journey to $1 million.
Q2: How long can the market's liquidity and positive sentiment last? Is the rise still related to the interest rate cut expectations driven by Trump?
Arthur Hayes: Overly focusing on interest rate cuts is somewhat misplaced. People always want to apply the experiences of 2008-2019—once quantitative easing policies are introduced, and the Fed prints money weekly, we buy assets and make guaranteed profits, which has become a reflex in the financial markets, but the rules of the game have changed now. When ordinary people realize that quantitative easing means inflation, and inflation affects the ruling party's electoral prospects, the policy toolbox must be updated. Yellen's actions at the end of 2022 are a typical example—though not nominal QE, it created liquidity in some form, driving stocks, cryptocurrencies, and gold to surge in the subsequent 18-24 months, until Trump took office.
Now people are still waiting for Powell to cut interest rates or restart QE, which is completely a futile endeavor.
Currently, the US Treasury is implementing a bond buyback program, which, while not as straightforward as QE, essentially provides leverage for Treasury buyers. As government deficits balloon, trillions of new debt will flood the market, meaning liquidity is still being injected, just under a different guise. If you wait for traditional QE signals to enter the market, you might still be on the sidelines when Bitcoin rises to $500,000.
The truly important data to pay attention to is volatility, especially the volatility index of the bond market (MOVE). When this index breaks 140, policymakers will definitely intervene: for example, after it hit 172 during intra-day trading on April 8, JPMorgan CEO Jamie Dimon immediately criticized Trump's tariff policy on television, and Trump quickly pivoted; after MOVE broke 140 in September 2022, Yellen swiftly adjusted the bond issuance structure, and the market rebounded. History repeatedly proves that as the leverage ratio of the financial system rises, the threshold for policymakers' intervention is decreasing.
Trump, as a 'volatility machine', is actually a positive for Bitcoin. He commonly uses the strategy of 'maximum pressure - testing reactions - quick pivot', and this unpredictability is exactly what the crypto market thrives on. We do not 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 equally fierce, and do the rising logic of Bitcoin and gold align?
Arthur Hayes: I believe gold and Bitcoin are different expressions of the same phenomenon, just with different buying groups.
Ultimately, I think 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 – excessively high inflation and the possible 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' operates. Hedge funds use the price difference between spot bonds and futures contracts, layering in high leverage arbitrage. As the Treasury relaxes bank capital requirements, these funds can participate in Treasury auctions with higher leverage. Although the Treasury's buyback program does not create liquidity itself, it sustains the operation of the Treasury market, allowing for continued bond issuance—against the backdrop of a 22% surge in deficit rate (in the first six months of FY2024 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 from Odaily Planet Daily: another guest in the interview is ether.fi CEO Mike Silagadze), assuming the vision described by Mike is realized, it may indeed outperform Bitcoin. However, if you enter at an inflated price, even if the project generates $1 billion in revenue, the percentage return from that starting point will still be hard to beat Bitcoin.
Any asset can potentially outperform Bitcoin, but it depends on two variables: the price range at which it is bought, and the income growth curve during the holding period. There are many undervalued cash flow tokens, and when the 'altcoin season' or 'fundamental season' arrives (i.e., the peak stage of Bitcoin's dominance), there is indeed explosive potential.
Q6: Has Bitcoin's market share peaked?
Arthur Hayes: I don't think so.
Institutional investors and family offices are currently experiencing a cognitive awakening—Trump has shattered the illusion of 'American exceptionalism', exposing the essence of this empire prioritizing basic voters over capital security.
This group of funds will begin to understand the significance of Bitcoin's existence; they will increase their holdings in gold, reduce their holdings in Nasdaq and US Treasuries, and reallocate to assets that are decoupled from the current system. This migration will first focus on Bitcoin rather than other tokens—wealthy individuals will not immediately buy altcoins.
Q7: I heard that Maelstrom (Arthur Hayes's fund) is doing some mergers and acquisitions, integrating new crypto businesses?
Arthur Hayes: We are operating a small merger and acquisition fund. There are some cash flow-positive crypto businesses that have been misunderstood by traditional investors for certain reasons.
We have great 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 conduct a leveraged buyout of one of them to improve its business as sponsors. There are many segmented high cash flow businesses in the crypto space, which may not be purely blockchain businesses, but service providers that traditional private equity market investors are not very fond of, because they are not high-growth potential companies like Coinbase. However, if we assume this area will grow, we need certain services that only crypto-native institutions can provide.
Q8: At this stage, what are your criteria for screening assets?
Arthur Hayes: First, I want to find protocols or businesses that users are paying real money to use—not incentivized by tokens, but where users are spending stablecoins or other cryptocurrencies to purchase services. A typical example is exchanges, such as Hyperliquid, which has grown from zero to capture 10-20% of the perpetual contract market within 18 months. They built an extremely efficient order book system, and the fees paid by users are directly used for token buybacks; this straightforward business model makes sense.
The second key point is how token holders benefit. Many projects making a substantial profit (like some top DEXs) do not share a piece of the pie with token holders. Take Uniswap as an example—no matter how much the protocol earns, holding UNI is of no use, which is why I do not pay attention to its price at all. If the project relies on issuing tokens for financing and does not allow the community to share in the profits after the protocol succeeds, that is simply a scam.
My core criteria for investing in tokens are very clear: first, there must be real paying users, and second, there must be a clear profit distribution mechanism—whether through buybacks, dividends, or other forms. This way, I can calculate expected APY, perform cash flow discount analysis, and assess whether the current valuation is reasonable. For the past month and a half, I have been patiently laying out these types of projects, as the market's irrational sell-offs have created excellent buying opportunities—being overly sold off just because 'it's not Bitcoin' has instead led to strong cash flow protocols appearing as golden opportunities.
