BitMEX founder Arthur Hayes: Trading思路 under the Ethereum Merge narrative
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BitMEX founder Arthur Hayes: Trading思路 under the Ethereum Merge narrative
You don't need to do anything; the price of ETH will rise naturally.
Navigating Web3 tides with focused insightsWritten by: Maestro
Compiled by: TechFlow
Bankless recently released a podcast episode titled "CryptoHayes," discussing the idea that "Arthur Hayes is trading based on the Ethereum merge narrative." This article summarizes the key points discussed in the podcast to help readers quickly grasp its essence.
1. On Arthur's Writing
Question: Why have you written so much recently?
Writing helps me clarify my thinking—it’s an intellectual exercise. Especially when others challenge your views, it sharpens your reasoning. When your work is visible globally, anyone can critique it and point out what you’ve missed.
Thus, writing opens yourself up to criticism from anyone in the world. Over time, this makes you a better thinker and investor.
2. On Trading
Question: Why do you trade instead of HODLing?
It’s just my mindset. I believe “buy and hold” works for some people, but definitely not for me. When I first discovered BTC, I didn’t have a long-term holding mindset (e.g., 10 years).
I also don’t trade on very short timeframes because that’s extremely difficult and requires immense effort and time to master.
3. On Macro
Question: What are the main causes of inflation today?
Two major factors are driving inflation:
- During Covid, governments decided to print large amounts of money and distribute it to people, who then spent it on many goods. This caused inflation due to excessive money supply in the economy.
- During the Ukraine war, governments chose to sanction Russia, the world’s largest energy exporter.
These two factors are the primary drivers of inflation. Removing the largest exporter from the global economy makes everything more expensive. Governments can raise interest rates to curb monetary inflation, but they struggle to address structural inflation caused by energy supply disruptions.
However, the U.S. is in a better position than Europe because it has abundant land to feed itself. Europe might manage food production too, but it cannot operate industrially without energy. Countries like Germany cannot function without Russian gas—German manufacturing prices have already surged 40% year-on-year.
Additionally, the strengthening dollar is highly detrimental to Europe and Japan, as all energy is priced in dollars, causing their import costs to spike.
4. On Cryptocurrency
Question: Why cryptocurrency? Why did you become a professional crypto trader?
We are currently in a period of monetary technological transformation driven by the cryptocurrency industry. The progression of the world has evolved from double-entry bookkeeping in the 16th century, to the printing press, paper money, telegraph communication, computers, and now to cryptocurrencies.
We’re moving toward a world where money and technology work together, as exemplified by Bitcoin. We are reorganizing how society interacts with money using this new technology—the first time in history that anyone can create their own currency by writing code and publishing it online.
But everyone lives under different systems with different rules. Therefore, cryptocurrencies may prove valuable in certain environments or countries, while being entirely useless in others.
5. On Value
Question: As a trader, what do you use to measure your value—dollars, euros, or Bitcoin?
Everything I do revolves around “hydrocarbons.” Hydrocarbons are the primary fuel source for human survival—air conditioning, electricity-powered computers, food flown across the globe to supermarkets—all depend on hydrocarbons to function.
Your ability to maintain a certain standard of living depends on your access to hydrocarbons.
Therefore, whether it’s Bitcoin, dollars, gold, yen, or euros doesn’t really matter—if you can’t purchase enough hydrocarbons to sustain your desired lifestyle, then it’s not the right investment portfolio.
Hence, I want to hold claims (money) usable for energy. I don’t want to hold claims that depreciate over time. I aim to store value relative to hydrocarbons—that will be the long-term asset in my portfolio, and that isn’t necessarily only $BTC and $ETH.
6. On Ethereum’s Merge
Question: Why are you now highly focused on $ETH?
The fact that the second-largest mainstream cryptocurrency is transitioning from PoW to PoS represents a structural change within $ETH’s infrastructure itself. Its issuance will decrease, and it’s the only currency of such scale undergoing this kind of transformation.
We already know the post-merge token distribution schedule—its impact will resemble that of Bitcoin halving. As long as the merge succeeds, the cash flow is guaranteed.
I like this trade. Even if the Fed’s stance remains uncertain, I can still profit from Ethereum because a massive structural shift is underway—one that creates sufficient upside potential to possibly overcome negative macro conditions.
We can see that although transaction volume has dropped significantly since DeFi Summer, Ethereum still hosts the most on-chain activity. There will continue to be users of these applications today and after the merge. Moreover, the merge won’t be influenced by political decisions or figures.
7. On Post-Merge Ethereum Price
Question: Has the price impact of the merge already been priced into the market?
Many people still don’t believe the merge will happen—including myself—because no one can guarantee with 100% certainty that ETH will smoothly transition to PoS without any issues.
A rational way to think is: “Show me PoS. Show me it working. Show me all the DApps operating just as before.”
So until all that happens, there’s justification for believing the merge might not occur.
DavidHoffman.eth noted one bearish view of the merge: it’s an overhyped event, and as the merge approaches, the likelihood of people rushing to buy $ETH immediately afterward is very low.
Arthur replied: “You don’t need to do anything—ETH’s price will rise naturally.”
For example, let’s assume today’s market consumes 100 ETH in gas fees. After the merge, due to reduced ETH issuance from the consensus mechanism change, ETH becomes more scarce—people won’t sell as much ETH as before.
Yet, demand for dapps remains unchanged—we still consume 100 ETH in gas. Thus, we don’t need new buyers to create additional usage demand (ETH will always be used as gas; this demand is unaffected by the merge—you don’t need to increase buyers to boost ETH demand).
Unless the number of DeFi users stops growing and declines from current levels, there will be consistent $ETH demand for gas fees even as supply decreases.
Demand stays constant while supply drops—so $ETH’s price must rise.
8. On $ETH’s Target Price
Question: If the merge hasn’t been priced in, what’s your target price for $ETH?
I’ve already bought call options targeting $3,000 by year-end. I’m not worried about the Fed—even if the Fed hikes rates by 20%, $ETH remains essential for using dApps, and supply will remain below demand.
9. On ETH Trading Strategy
Question: How are you executing this trade—spot, options, derivatives?
Using leverage brings liquidation risk, but timing also matters. You need strong conviction on timing and confidence in the team’s ability to deliver (PoS).
The simplest approach is obviously spot trading, but it won’t generate big returns. If you’re making bold bets, you need good timing. I chose December expiry because liquidity is typically strong, and markets often move significantly in Q4.
10. On How Traders Survive in the Market
Question: How have you survived across multiple crypto trading cycles?
It all comes down to position sizing. The main reason 3AC collapsed was because they made wrong trades and failed to properly size their positions.
I’ve been wrong on many things, but as long as I’m right on a few, I can still make profits. Ultimately, the most important thing in trading is position sizing.
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