TechFlow news — Arthur Hayes, co-founder of BitMEX and Chief Investment Officer of Maelstrom, said in an interview with CoinDesk during the Token2049 conference in Singapore that the Federal Reserve is about to announce its first interest rate cut since 2020, but risk assets—including cryptocurrencies—could plummet within days after the cut.
Hayes believes the rate cut is a bad decision because inflation remains an issue in the United States, and lowering borrowing costs would exacerbate inflation.
Additionally, narrowing interest rate differentials between the U.S. and Japan could lead to a sharp appreciation of the yen, triggering unwinding of yen carry trades. Hayes expects U.S. interest rates will ultimately fall from their current 5.25%-5.5% range to near zero.
He agrees with Scottish market strategist Russell Napier that the central banking era is over, and politicians will take over, directing banks to create liquidity in specific sectors of the economy.
Under such circumstances, Hayes said, cryptocurrencies will become the only globally portable asset allowing investors to exit the system.
