Guest: Arthur Hayes
Host: Bonnie & David Lin
Air Date: June 16, 2025
Summary of key points
In this podcast, Arthur Hayes, the inventor of the cryptocurrency perpetual contract, talks about his expectations for the future economy. He has spent most of his career in Asia and knows the financial markets in Asia like the back of his hand. He directly answers financial questions that even Asian politicians cannot answer. What does he think about the future trend of the crypto? Why do you think that most of the Altcoin you have will never rise again? How does he judge the price trend of Bitcoin?
Summary of highlights
Bitcoin price could reach $250,000 by the end of this year.
Retail interest in Bitcoin remains high because it has performed so well and is the best understood of all crypto assets.
Most Altcoin may not rise again this year because they lack "product-market fit", that is, their products cannot meet market demand, and these projects usually have no revenue to return to token holders.
Compared to stocks or gold, Bitcoin’s scarcity and decentralization give it a unique advantage in dealing with currency depreciation and liquidity flooding.
When selecting Altcoin, focus on the “narrative”, which is the story behind a project and its logic to attract investors.
Be rational when buying Altcoin and avoid blindly following the trend.
The relationship between China and the United States will gradually grow distant, but it will not end as quickly as some predict.
Most traders don’t really care whether the platform is fully decentralized or not. They care more about liquidity and rich trading products.
· The products of various trading platforms are not very innovative, and the fees are basically the same. Therefore, the core of competition lies in marketing.
There may be a lot of conflicts between generations, and the government may choose to print a lot of money to deal with this problem. For the government, this is the simplest and most direct solution.
Bitcoin price forecast
David: Can you elaborate on the timeline for Bitcoin to reach $1 million by 2028? You mentioned earlier that the price of Bitcoin will reach $125,000 by the end of this year. Is this prediction still valid?
Arthur Hayes: I still think that the price of Bitcoin can reach $250,000 by the end of this year. Although there may be some fluctuations along the way, this is my year-end target. As for the prediction of Bitcoin reaching $1 million, my assumption is that the world's major economies may print about $9 trillion in currency in the next few years. For example, the US government plans to support institutions that are allowed to create mortgages, and they are expected to print $5 trillion.
In addition, due to the implementation of the supplementary leverage ratio exemption policy, the banking system may purchase up to $1 trillion in assets, including assets sold by foreign investors. I believe that the banking system will become more flexible as they no longer need to worry about capital requirements related to Treasury bonds and can provide more loans to the US real economy. This will lead to more credit support for industries such as manufacturing, which will eventually flow into the cryptocurrency market.
David: When the Fed implemented quantitative easing in 2020, we saw a rally in almost all asset classes, not just Bitcoin. This is indeed good for Bitcoin, but from your analysis just now, it seems that this may also be good news for other assets, such as stocks and gold. Why do you think Bitcoin will perform better than other assets in this situation?
Arthur Hayes: The main reason is that the supply of Bitcoin is fixed, and its total amount is strictly limited to 21 million. And in terms of market value, the Bitcoin market is relatively small, so when a large amount of money pours into a relatively small market, the price will rise rapidly. This is why Bitcoin has become the best performing financial asset in the past 15 years. Compared with stocks or gold, Bitcoin's scarcity and decentralization give it a unique advantage in dealing with currency depreciation and liquidity flooding.
Bitcoin hits new high, but retail investors lack interest?
David: The market is changing rapidly. Do you think the current monetary easing policy (printing money) will trigger more "Degen" activities?
Arthur Hayes: Yes, I agree. If you don't have a lot of financial assets and you see inflation eroding your purchasing power, you might choose to use your little savings to make risky investments in the hope of protecting against this.
David: Why does the "Degen" activity seem to be reduced now compared to 2021? I mean the interest of retail investors in Altcoin. In fact, some people have observed the number of views on cryptocurrency-related channels and found that the number of views is significantly lower now than it was four years ago, even though the prices of Bitcoin and many other crypto assets have hit new highs.
Arthur Hayes: I think the main reason is that many Altcoin are not performing well. There is a problem with their pricing, and they are often overvalued. When you really ask, "Okay, your project is online, the hype is over, so where are the customers? Where is the revenue?", the answer is often "We have nothing." However, the fully diluted valuation (FDV) of these projects may be as high as $5 billion. In this case, how do you make it worth 10 times more? It's very difficult. In comparison, it is relatively easy to grow from 500 million to 5 billion, but it becomes very difficult to grow from 10 billion to 100 billion based on marginal prices. So, I think these Altcoin are generally overpriced and it is difficult to attract new investors.
David: Some people say that Bitcoin is now viewed more as an institutional investment vehicle, and therefore retail interest in it is waning. Do you think this argument holds water?
Arthur Hayes: Retail investors remain very interested in Bitcoin because it has performed so well and is the most easily understood of all crypto assets.
Your Altcoin may no longer rise
Bonnie: Everyone is discussing whether the copycat season will come. Some people say that there are too many low-quality projects in this cycle. What do you think of the current situation?
Arthur Hayes: I think most Altcoin may not rise this year because they lack "product-market fit", that is, their products cannot meet market demand. In addition, these projects usually have no revenue to return to token holders. In other words, they are more like venture capital tokens with high "fully diluted valuation" (FDV) and low circulation. This type of token usually does not perform very well. So you see some projects like Berachain and Monad whose prices have almost been falling. Although these projects have large financing scales and high hype, it is difficult for prices to rise because there are no actual customers willing to pay for their products or services. However, there are also some excellent projects that do achieve product-market fit and users are willing to pay for their services or products. These funds flow to token holders through the protocol. I think those projects that can do this will perform well, such as Pendle and Ethfi.
Bonnie: So, the last cycle saw venture-backed tokens perform really well, why is this cycle different?
Arthur Hayes: The main reason is still the lack of product-market fit. If a project is highly valued, but there are actually no customers using its blockchain or product, it will be very difficult to rekindle market interest after the price drops.
Bonnie: I remember you mentioned in an interview before that Bitcoin's market dominance might reach 70%. Do you think that will be the year of the "Altcoin season"?
Arthur Hayes: Yes, I still think that will happen, and it's probably going to be around 65% market dominance for Bitcoin.
David: So before Bitcoin reaches that point, is it possible that other crypto assets will perform better?
Arthur Hayes: It's not obvious at the moment. I think Bitcoin's market dominance depends largely on Ethereum's performance. If Ethereum's price and market activity don't change significantly, it's hard for Bitcoin's dominance to fluctuate significantly. Ethereum's popularity has declined and many investors are less interested in it. So if the market cycle changes, I'd be more inclined to bet on Bitcoin than other assets.
How to choose Altcoin?
Bonnie: How do you personally choose Altcoin? What aspects do you usually pay attention to?
Arthur Hayes: I focus on "narrative", that is, the story behind a project and its logic to attract investors. Now the market focuses more on whether it can generate stable cash flow. If a project can bring a lot of cash flow, it is very important to me. In addition, I will also see whether investors can get actual returns by holding the project's tokens.
Bonnie: What about valuation? Do you pay special attention to it?
Arthur Hayes: For projects that are still in the early stages, we usually set a very clear investment cap to ensure that we do not overpay. But for projects with good liquidity, I am more concerned about whether they can generate stable cash flow.
Bonnie: Don't you think the narrative changes too quickly? It's hard to keep up.
Aurthur Hayes: That's true, but if you buy at the right price, it's not a problem. If you can get in when the price is low enough, you are likely to make a profit once the project goes online. But if you buy at a high price when chasing market hotspots and try to participate in every hot project, the end result is often a loss. The key is to stay rational and avoid blindly following the trend.
The inventor of the cryptocurrency perpetual contract
Bonnie: Can you briefly share what inspired you to design a perpetual contract? How did this idea come about?
Arthur Hayes: Actually, the idea came from customer feedback in our early operations. My co-founder and I were responsible for handling all customer support requests, and we found that many users could not understand traditional futures contracts. They were often confused about why the futures price was different from the spot price and why futures had an expiration date. These questions not only confused users, but also took us a lot of time to explain.
Therefore, we began to think, can we design a trading product that has no expiration date and can provide high leverage? This is the original intention of our creation of Perpetual Swap. After many attempts, we finally designed a product that is easy for users to understand and officially launched it in May 2016. At the beginning, most people were not interested in this new product, but as time went on, more and more people began to use it because it solved the real problems of users and also reduced the pressure on us to answer questions repeatedly.
I personally don't usually use leverage. If I invest, I usually buy spot assets directly. I would recommend leverage to those who have enough time to study the market and are proficient in trading skills. But if you don't have time to study in depth and lack patience, it's best not to use leverage because the risk will be high.
Bonnie: If I were to use perpetual contracts, what do you think I should focus on first? Risk or position size?
Arthur Hayes: The most important thing is to be clear about your goals. You need to know what you want to achieve, such as how much profit you expect to get? How much risk can you bear? Under what circumstances will you stop loss or increase your position? All of these need to be planned before the transaction begins. Because once you enter the market, emotions can easily affect your judgment, which often leads to wrong decisions. Being fully prepared is the key to successful trading.
Why did the Taiwan dollar suddenly appreciate?
Bonnie: In recent days, the Taiwan dollar has suddenly risen by 10% against the US dollar, but our bankers can't explain why. What do you think?
Arthur Hayes: Indeed, this is a very interesting phenomenon. I won't analyze it too deeply, but you can refer to some articles, such as the research by Brad Setzer and another economist in the Financial Times (FT), who mentioned that Taiwan's life insurance companies may be among the richest institutions in the world. These companies have a lot of investments overseas, and Taiwan itself is an important center for global manufacturing, especially in the semiconductor field. However, the Taiwanese government and central bank have long adopted a policy of keeping the Taiwan dollar weak. In order to achieve this goal, they need to create a lot of Taiwan dollar liquidity in the country, which is one of the reasons why housing prices in Taipei and other cities are high.
These institutions usually accumulate large amounts of US dollar reserves, but in order to avoid being accused of being a "currency manipulator" by the US government, they transfer these US dollars to Taiwanese life insurance companies. These life insurance companies then indirectly hold a large amount of US Treasury bonds by purchasing bonds and conducting structured derivative transactions with international banks. In addition, many hedge funds also like to use the Taiwan dollar for financing, because the weakness of the Taiwan dollar is usually driven by government policies, and they take advantage of this to carry out large-scale arbitrage transactions.
In early May this year, there was a sudden concern in the market: if Taiwan's life insurance companies started selling US Treasuries and transferring the funds back to the Taiwan dollar, then hedge funds would have to close their carry trades. This led to a large amount of funds flowing back to the Taiwan dollar market, which pushed the Taiwan dollar to appreciate sharply in a short period of time. I don't think the Taiwanese authorities chose to intervene in the market or reverse this flow of funds by increasing the supply of Taiwan dollars. This may be because they want to show the US government (especially the Trump administration) that they are not deliberately devaluing the Taiwan dollar, but accepting the fact that the Taiwan dollar has appreciated. I think this is the main reason for the sudden sharp rise in the Taiwan dollar, and it may continue to appreciate in the future.
Bonnie: Do you think similar situations will happen in other parts of Asia?
Arthur Hayes: This trend has already begun to emerge. Similar phenomena are also happening in countries such as South Korea, Singapore, Malaysia and Thailand. These countries have also adopted a long-term policy of weak currencies, while accumulating large amounts of US dollar reserves and investing overseas. Now, these funds are gradually flowing back to their domestic markets, triggering a similar currency appreciation effect.
Will the US government really buy Bitcoin?
David: You mentioned a potential risk that if the Democrats win the next presidential election in 2028, they may cancel the US's strategic Bitcoin reserves. If the strategic reserves are really canceled, do you think there will be a lot of selling pressure in the market?
Arthur Hayes: It's possible. It depends on how much bitcoin the US government has accumulated and what the fiscal situation is at the time. I don't think their holdings are as high as 200,000 bitcoins (the number of bitcoins seized by the US government through judicial seizure). If the government faces budget pressures, these bitcoins are likely to be sold. So there are a lot of uncertainties here, but it is indeed possible that it can be a source of funds.
David: Is it possible that they will buy more Bitcoin in return? After all, so far, they have not actively done so.
Arthur Hayes: I think it is politically unfeasible for the US government to take the initiative to buy Bitcoin. If the government wants to use fiscal funds, it usually chooses to cut taxes, build bridges or hospitals, and other projects that can directly benefit the majority of people, rather than buying assets such as Bitcoin that are only held by a few people. Theoretically, the US government can do this, and anything can happen. But from a political point of view, this is not a wise choice. If the government has a large amount of money at its disposal, it is obvious that spending this money on Bitcoin is not the most popular way to win voter support.
David: But the government has already won votes with other policies, so they don't need to do something like this.
Financial Regulation and Money Printing in the United States
Bonnie: You mentioned that the US might impose capital controls, is that true? Especially on foreign investors’ asset ownership.
Arthur Hayes: Yes. I think they might start by eliminating the "withholding tax exemption." Under current policy, foreign investors do not need to pay the 30% tax on U.S. bonds like local investors do. If this policy is eliminated, it may make foreign investors feel that U.S. Treasuries are less attractive, and they may turn their funds to other investment channels. I think this trend may gradually emerge.
Bonnie: Does this mean the market will crash?
Arthur Hayes: No. Even if foreign investors withdraw their capital, the US government will fill the gap by printing money to avoid major market turmoil.
David: In fact, we saw a similar situation in early April this year - the prices of bonds and stocks both fell, the yield of Bitcoin also fell, and the bond yield rose. So I want to ask, if the United States really implements capital controls, will it trigger a similar market reaction again, causing the prices of various assets to fall and reducing the liquidity of the US financial system?
Arthur Hayes: I think capital controls will be implemented gradually so that they will not cause dramatic market fluctuations. The government has realized that sudden policy changes may have consequences they do not want to see, such as sharp fluctuations in the bond market, or even make the situation out of control. If capital controls are implemented gradually, they will fill the funding gap in other ways, such as letting the Federal Reserve, the Treasury, the banking system, or some private institutions that are allowed to create credit at low cost to replace foreign investors who are forced to sell assets.
David: Recently we have seen a resurgence of correlations between stocks, Treasury yields, and Bitcoin. Do you think this correlation will continue?
Arthur Hayes: I don't think so. There may be some risk aversion events in the future, which will lead to increased market volatility. In this case, Bitcoin may play a greater role as a tool to hedge risks.
Buy all assets? Buy non-US assets?
Bonnie: You mentioned earlier that you want to “buy all the assets and experience American life.” Later, you talked about the “breakup” between the U.S. and global capital. Do you think this relationship will continue, or will it eventually break apart?
Arthur Hayes: I think the relationship between the two will gradually grow apart, but it won't end as quickly as some people predict.
Bonnie: So when do you think this kind of "breakup" will happen?
Arthur Hayes: It could take decades.
Bonnie: So, if foreign capital really gradually withdraws from the US market and flows back to the local market, what impact will this have on the global economy? What will the specific scenario be?
Arthur Hayes: Currently, foreign capital is pouring into the United States because the U.S. market is performing relatively well, attracting a lot of investment in stocks, bonds, and real estate. If these funds withdraw from the United States and return to their local markets, the performance of the U.S. market may be affected. For emerging market countries, such as Taiwan, Indonesia, or Thailand, this may be an opportunity. The return of funds will drive the appreciation of the currencies of these countries, thereby increasing the purchasing power of local consumers. With the improvement of consumption power, people may choose to invest and start businesses in these countries to meet the new market demand. This shift may make the economies of emerging markets more active and achieve growth.
US Stablecoin Act
Bonnie: Regarding the stablecoin bill, do you think this will force stablecoin issuers to buy more U.S. Treasuries?
Arthur Hayes: I don't think so. I think this bill is more like enabling banks to participate in Tether-like businesses. If I'm a bank and I can now create my own stablecoin, then I can basically absorb deposits at zero cost. At the same time, if the supplementary leverage ratio exemption is eliminated, I can also use these deposits to buy US Treasuries and get a stable income from them.
Bonnie: I have heard a point of view from the head of a trading platform. He believes that other countries do not need to work so hard because the United States has already taken an advantage in the competition between cryptocurrencies and Bitcoin. After all, the underlying asset used when people buy Bitcoin is USDT, which is pegged to the US dollar.
Arthur Hayes: I disagree. In fact, one of the largest cryptocurrency revenue markets in the world is Korean traders. So I don't think the U.S. is completely dominating this space, it's just one of many players.
Open Interest Indicator
David: Recently, the open interest of Bitcoin futures hit a record high. I checked my notes and the total open interest on May 22 reached $89.8 billion, an increase of $15 billion in just five days, which reflects the unprecedented level of leverage in the market. What do you think of this phenomenon?
Arthur Hayes: It just shows that there is increasing interest in this space, right? Obviously, the price of Bitcoin has reached a new all-time high, and more leveraged positions have been established, and the market generally believes that the price will quickly break through 110,000 or even higher. So I think this is a manifestation of optimism.
David: Based on your past experience at BitMEX, whenever there is a surge in open interest in futures, what kind of market reaction does it usually bring?
Arthur Hayes: I think a key point to pay attention to is the expansion of the "basis". Simply put, it is the premium between the Bitcoin futures price and the spot price. At present, there has not been any extreme situation, such as a premium of more than 10%.
David: In BitMEX trading, do you think there are some specific indicators that can be used to predict sharp market fluctuations? Are these indicators consistent?
Arthur Hayes: To be honest, I haven't found any clear indicators that can be used to predict this. And to be honest, I haven't studied the data in depth. So, there are no conclusions to share at this time.
Decentralized trading platform hunted (Hyperliquid)
Bonnie: There was a recent incident with the JellyJelly meme coin, which sparked controversy about whether Hyperliquid is truly decentralized. If a centralized exchange can intervene or influence you with $10 million in funds, is it really safe to use a decentralized exchange like Hyperliquid?
Arthur Hayes: It's clear that Hyperliquid may not be as decentralized as it claims. It seems that the management team of Hyperliquid has chosen to prioritize protecting the purchasing power of their HLP tokens rather than fully complying with the market's clearing rules for Jello tokens. From this perspective, yes, it is not completely decentralized. On the other hand, it also shows that they value HLP very much because it is the basis for many markets to operate. For me, this makes me more confident when trading on Hyperliquid. After all, most traders don't really care whether the platform is fully decentralized. They value liquidity and rich trading products more. If Hyperliquid can provide these services in a relatively decentralized way, it is enough and we can trade on it with confidence.
Intense competition between trading platforms and banks
Bonnie: Many centralized exchanges are expanding into payments because it’s the obvious next step. How do you see exchanges developing in the next 10 years?
Arthur Hayes: I think the market is now fully competitive. There is not much innovation in the products of various trading platforms, and the fees are basically the same. Therefore, the core of competition lies in marketing, especially in the United States. Now all banks have begun to provide similar brokerage services, which makes it more difficult for centralized trading platforms to survive. If banks like JP Morgan prohibit customers from buying Bitcoin, it will be difficult for trading platforms such as Coinbase and Kraken to maintain their profit margins.
David: Speaking of Coinbase, some of the big exchanges have completed their IPOs in recent weeks, which has further accelerated the mainstreaming of cryptocurrencies in the S&P 500. Do you think that people who are investing in the S&P 500 now need to realize that they are actually indirectly exposed to Bitcoin through these index funds?
Arthur Hayes: I don't think it's a cause for concern. Many investors simply buy index funds, and they hold ETFs (Exchange Traded Funds), which contain many assets that may not align with their personal preferences. But they don't care, they just want to participate in the market.
David: Regarding the development of trading platforms, as centralized trading platforms gradually become mainstream, do you think they will attract deposits from ordinary users and traditional financial institutions like JP Morgan and Bank of America?
Arthur Hayes: I don't think so because these banks have a stronger distribution network than the cryptocurrency companies.
David: So there will be no direct competition between the two sides for the foreseeable future?
Arthur Hayes: There is actually direct competition, right? If JP Morgan allows users to buy Bitcoin, and Coinbase also offers a similar service, then ultimately users are buying the same Bitcoin. So the core of the competition comes down to transaction fees. If JP Morgan can offer zero-fee transactions because they can make money from other banking businesses, and Coinbase still relies on its highly profitable brokerage business, how will Coinbase respond?
David: If you were to create another BitMEX today, how would you prepare yourself to handle the volume of traffic in the crypto markets?
Arthur Hayes: I will focus on attracting more "Degen". I will not try to compete in the Bitcoin trading field, because it will be a loss-making project. I will focus on meme coins and new project launch platforms. I think I can create more revenue by optimizing the new token issuance process, rather than competing in the Bitcoin and US dollar trading market, because that is a low-profit, high-competition field.
Squid Game of the Eastern World
Bonnie: You’ve spent a lot of time in Asia, and I’m curious, what have you learned in Asia that is different from the United States when it comes to money and investing?
Arthur Hayes: I think Asians generally have less trust in the government, so they are more cautious and suspicious when it comes to investment and wealth management. Their savings habits are also very different. For example, gold plays an important role in Asian families, and real estate investment is also very common. This difference in mentality shapes their unique investment style.
Bonnie: So are their investment styles more risk-taking or more conservative? Why is the cryptocurrency trading volume in South Korea so large?
Arthur Hayes: This is related to several factors. First, the Internet penetration rate in South Korea is very high, and people have easy access to online trading platforms. Second, South Korea's gaming culture is very developed, which makes it easier for young people to accept the concept of digital assets and virtual economy. In addition, the structure of Korean society is relatively simple and the competition is very fierce. Although Koreans are generally well educated, high-paying jobs are relatively limited, and many people find it difficult to achieve wealth freedom through traditional careers. Therefore, many people choose to find a breakthrough by trading stocks or cryptocurrencies. This strong sense of competition has driven the growth of trading volume.
New generation investment perspective
Bonnie: The older generation has a lot of wealth, and they hope to fund their retirement by selling assets to the younger generation. But the problem is that the younger generation is not keen on buying and accumulating these assets, but is more willing to pay for various experiences. How do you think this phenomenon will develop?
Arthur Hayes: I think it will be very interesting to watch the regulatory development of cryptocurrencies or other digital assets in the future. What is happening now is that the baby boomers (people born between 1946 and 1964) have a lot of stocks, real estate and other assets. But the question is, will anyone really be willing to buy these assets? Maybe some young people will be interested in a big house in the suburbs, or there will be demand for apartments in the city, but overall I'm not sure. So if the older generation needs to sell these assets to fund their retirement life, and the younger generation is unwilling to take over, this will become a big problem. Even worse, if asset prices fall and the wealth of the older generation shrinks, they may not be able to afford their retirement life. At that time, the government may choose to fill the pension gap by increasing taxes and pass the burden on to the younger generation. But will young people accept such an arrangement? This is still unknown.
Bonnie: So what do you think might happen?
Arthur Hayes: I think there will probably be a lot of conflict between generations. Although I can't predict the final outcome, I think the government will most likely choose to print a lot of money to deal with this problem. After all, for the government, this is the simplest and most direct solution.
Arthur's Fund Layout
David: What are Maelstrom’s current priorities for asset allocation?
Arthur Hayes: Most of our investment portfolio is in Bitcoin, and we also have a large position in Ethereum. In addition, we are also involved in some project-related investments, including consulting and direct investment. For some projects with low liquidity but promising prospects, such as Ethereum and Pendle, they are currently our key holdings.
David: How often do you adjust your Bitcoin holdings?
Arthur Hayes: We don't trade very often overall. Maybe only one or two big buys or sells a year because we don't want to trade too frequently. Our goal is to outperform Bitcoin. If we find a new project and it outperforms the Bitcoin capital we sell for investment, we will use the profits to buy more Bitcoin.
David: We've talked to some extreme Bitcoin supporters before, and they think the way to outperform Bitcoin is to buy more Bitcoin. What do you think?
Arthur Hayes: I don't completely agree with this view because it also depends on the time period. For example, a token goes from $7 to $300. If you invested at $7 and sold at $300, then your gains clearly exceeded the performance of Bitcoin during this time period.
David: Last question, what’s next for Maelstrom? Any new expansions or projects?
Arthur Hayes: We are launching an acquisition business. Specifically, we plan to raise investor funds to acquire certain cryptocurrency companies. The management structure of these companies may be reorganized, and we will focus on increasing new sources of revenue. In the future, we also plan to go public in the United States through a SPAC (special purpose acquisition company). We have already locked in a target company and are preparing to raise funds, hoping to significantly improve the company's profitability through this plan.
David: What types of businesses and operations are you interested in?
Arthur Hayes: We focus on companies with very stable cash flow and strong profitability. The company we are interested in has good profitability and healthy cash flow, and we plan to complete the acquisition at a reasonable price.
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