- Rising US Treasury yields would benefit cryptos in the long run, according to Hayes.
- He said the growing interest in TradFi could be detrimental to crypto’s core ethos, such as decentralization.
Arthur Hayes, founder of cryptocurrency exchange BitMeX, offered a refreshing look at the ongoing state of the crypto market.
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In a lengthy Substack essay, the American entrepreneur predicted that Bitcoin [BTC] will not fall below $20,000, as feared by a large segment of the industry’s traders and analysts. Instead, he predicted that the king coin will hover around $25,000 in the third quarter of 2023.
Higher US Treasury Yields Good for Cryptos?
Hayes, one of the keen observers of the crypto market and the US macro economy, based his forecast on a contradiction to the conventional understanding surrounding government bond yields.
Experts cited rising US Treasury yields as one of the main factors behind last week’s market crash. This was based on the theory that higher yields on risk-free government bonds generally hurt demand for speculative assets such as stocks and cryptos.
Arthur Hayes, on the other hand, believed that this situation offered good long-term prospects for riskier assets. He said,
“I also believe that at some point more investors will do the math and realize that the Fed and the US Treasury together hand out billions a month to wealthy savers. This money has to go somewhere, and some of it will flow into technology stocks and crypto.”
Do ETFs Spot a Threat to Decentralization?
Aside from the market’s next moves, Hayes has focused on the institutional interest in cryptos, which has been seen in the barrage of spot ETF applications in recent months.
He warned that the increased interest of TradFi would eventually damage the core principles of cryptos and blockchains. The entrepreneur said that these entities have no interest in reinforcing or even preserving Web3-specific ideals such as decentralization, privacy and resistance to censorship.
In addition, he predicted a limitation in in-kind redemption of crypto-financial products in the future, subject to applications being approved. This effectively meant that holders would no longer be able to redeem actual crypto and would have to settle for refunds solely in US dollars.
How much are 1,10,100 BTC worth today?
In short, Arthur Hayes’ prediction about cryptocurrencies in general turned out to be a mixed bag. While he downplayed the impact of certain macroeconomic events, the perceived threat to highly cherished fundamentals could make maximalists nervous.
At the time of writing, Bitcoin was trading hands at USD 26,400, up almost 2% in the past 24 hours, as per CurrencyMarketCap.