The money printer isn’t stopping, and Arthur Hayes says that means Bitcoin and DeFi are only just getting started. In this in-depth interview hosted by CoinFund’s Chris Perkins, the BitMEX Co-Founder and renowned macro thinker, shares why he’s fully invested in crypto, why Bitcoin is still the best-performing asset in history, and how U.S. policy could drive a $25 trillion stablecoin boom.
Hayes breaks down:
- Powell vs. Trump: why politics, not economics, will dictate Fed policy.
- How endless money printing will fuel Bitcoin’s next major surge.
- Why stablecoins could become the ultimate U.S. weapon, and reshape global finance.
- The coming trillion-dollar explosion in DeFi and his favorite projects now.
- Ethereum vs. Solana: what it will take to win the Layer 1 battle.
- The rise of digital asset corporations (DACs) and passive index flows.
- Why U.S. derivatives markets may never catch up to offshore exchanges.
If you want to understand the forces that will shape the next crypto bull run, this is a conversation you don’t want to miss.
Get our free investing report on silver here: https://wealthion.com/silver/
Concerned about Markets? Get a free portfolio review with Wealthion’s endorsed financial advisors at https://bit.ly/41gmWka
Hard Assets Alliance – The Best Way to Invest in Gold and Silver: https://www.hardassetsalliance.com/?aff=WTH
Arthur Hayes 0:01
No government ever when they have had the printing press refuses himself the ability to print money and hand out goodies to the people to win elections. That just doesn’t happen. So I just think it’s a structurally long trade. We’re all in this sort of Fiat debasement boat together, and Bitcoin has been this shining light, which has been the best performing asset in human history since it launched in 2009 I wouldn’t say that just because you’re coming in at 2025 and bitcoins at 120,000 or whatever it is that you missed the boat. We still have a long way to go.
Chris Perkins 0:41
I’m incredibly excited today because we have a very special guest, a guy by the name of Arthur Hayes. And so Arthur has a long, storied history. He’s one of the serious OGS came from a traditional finance background. We actually were just talking. We’re both at Citigroup together,
Christopher Perkins 0:59
and he went on to really start one of the most innovative exchanges in the world, and really made famous this thing we call perpetual swaps, which I can’t wait for him to talk about, but long story short, he’s one of the most thoughtful macro thinkers, investors in the space. Many of us follow him religiously, and it’s just an absolute pleasure. Welcome Arthur to the stage. Thanks for having me. No problem. We talked a little bit about your background. Would love for you to unpack it a little bit for the audience, and maybe we can start right there.
Arthur Hayes 1:31
Yeah, sure. So I grew up in the States. Was born in Buffalo, New York, went to university, at University of Pennsylvania in Philadelphia, went undergrad at Wharton Business School and took Chinese in school and decided that I wanted to move to China. Moved out to Hong Kong when I graduated and started working at Deutsche Bank in Hong Kong, then the city. I lasted five years in tradfi and the ETF and delta, one sort of like futures and arbitrage trading space, and then I caught the crypto bug after I got fired from city into the 2013 and sort of like, you know, the rest is history. And I’ve been doing this crypto thing for, you know, 12 years now.
Christopher Perkins 2:14
I think we had the same boss at one point in time. And I don’t think either that’s another story for another time, but I think right now we’re seeing an absolute mainstreaming of the space. Like a lot of people who are probably listening right now are like, Hey, I’m starting to get into it. But could you really, like, explain your your big thesis, like, what caused you to just say, Screw it, I’m going all in on this. I’m going to make it my life. What was that? What was that moment? What was that light bulb?
Arthur Hayes 2:39
So I’ve always been a gold guy. I started buying my, you know, small amount of gold back in like 2011 when it spiked to like 1600 or whatever it was. And I’ve always been quite critical of all of the money printing that’s going on. And, you know, as somebody who is trained in a traditional Western business capitalistic framework, when you enter the space in 2008 and every single bank is getting a government bailout, and you’re taught that that’s kind of a bad thing, but actually it was a great thing for asset holders. And, you know, we kept our jobs, which we all probably should have been fired at all these institutions. And so, you know, I entered the space sort of jaded already, and this is complete bullshit. And so when I read the white paper about Bitcoin, it sort of aligned with me philosophically. Back in 2013 I started trading it. I saw how immature the markets were. I saw that my value add was trading derivatives, and sort of started bitmex, sort of trying to build up that space. And then as I got more into more of the, you know, buying and holding. Because, you know, obviously have a business that does trading and whatnot. My main thesis, and this is basically all that I write about, is money printing, right? And the different ways in which the authorities around the world try to hide it from people and try to gaslight you about why it’s not happening, and, you know, trying to make it seem like it’s okay that, you know, a house costs 75% of your disposable income, and all these sorts of things all around the world. And so I think it’s a global phenomenon. Unless you’re extremely wealthy, you feel the effects of this inflation that every single government, regardless of whether they’re, you know, completely communist on one side or capitalist on the other, everybody does the same thing. We’re all in this sort of Fiat debasement boat together. And Bitcoin has been this shining light, which has been the best performing asset in human history, since it launched in 2009 and so I think that this has been a great ride. And obviously it’s still early, you know, for people to get involved in this industry, I wouldn’t say that just because you’re coming in at 2025 and bitcoins at 120,000 or whatever it is, that you’ve missed the boat. We still have a long way to go.
Christopher Perkins 4:52
I couldn’t agree more. I think we’re just getting started. This story just continues. Right? I’m actually in Jackson, hole Wyoming right now. We’re waiting on the Fed. I’m. Do you have any thoughts you know around the I think your your long term thesis is such a no brainer, and I think many people agree with you. What about in the near term? Uh, how are you thinking about the macro situation here and now?
Arthur Hayes 5:12
As we very interesting to see what Powell comes out with, because everybody’s saying the Fed should cut. You have Trump chirping on him. You have these shadow wannabe fed governors. Some of them are on the board. Some of them are proposed nominees, and supposedly, Powell is this Volcker, 2.0 type figure who’s supposed to inject some credibility back into the Fed of this nonpartisan which is bullshit, non money printing organization, and so he’s got this situation. And on one side, there’s an argument saying, Okay, there’s a labor market, there’s all these sort of statistics you can roll out, saying, This is why the Fed is being too restrictive. But on the other hand, and this is what I not that I have a probability waiting between the two, you have human nature, right? And you basically have this person who’s been vilified for good and bad reasons in the press by his ultimate boss, the president of supposedly an independent organization. Does he get up there on Friday and say, oh, yeah, sure, I cave. We’re going to cut 50 basis points on September. Was it 17 or 18th like as a human being, as a man, how does that feel, to just be completely bitched out and then you have to capitulate and the biggest stage in the world. So I think there’s a high probability that, well, you know, probably ultimately the Fed will cut at some point, whether it’s Powell or whoever else replaces him, or whatever, maybe Trump fires him, whatever it happens over the next year. But I think there’s a high likelihood that Powell sticks it out and just says, fuck you to Trump and doesn’t cut just because he’s a human and human beings don’t want to be put in these sort of situations. And I’ve been having this argument with a lot of very senior and prominent macro writers who, you know, put all these reasons why Powell has to cut and know why his job is so you know, uncomfortable being sort of the foil at which Trump launches all these tirades against. But at the same time, what a better way to prove that you are an independent monetary actor than to say, No, I’m sticking with my guns. I think that 4.25 to four and a half percent Fed funds is neutral and fuck you Trump. And because I’m General Paul, I’m an independent head of the Fed. So I think there’s that continue. I don’t know where it’s going to come out adults, ultimately, doesn’t matter. But I guess if you’re a trader, then obviously this is a very important speech you’ll give on Friday.
Christopher Perkins 7:37
Yeah, so it’s the pride thing that that’s nipping at him that, yeah, just we try to say that we’re not prideful. I think many that’s just generally human nature. So that mean, does that mean you’re risk off right now?
Arthur Hayes 7:47
No, I’m still pretty much fully invested, just because, again, I don’t have a monthly P L target to make, or a yearly P L target to make. I don’t want to over trade. Obviously, you know, everyone falls victim to that of some time trying to, like, you know, take five or 10% off the markets. I’m going to buy back in, but you just end up paying more fees to your to your brokers. And I’m just going to sit, sit back, and, you know, Paul comes out and says I’m not raising or doesn’t talk about cuts at all, and market tanks 15, 20% I’ve got some extra cash, and I’ll, you know, be going shopping on some things that I think are are cheap, just because I think that Trump and Besson are just setting up such a perfect situation for how money is going to be printed post 2026 in May. And I guess listen to a CNBC interview with zarvos, one of the Fed Chair hopefuls. And like, if that guy gets in, you know, Bitcoin will be at like, 15 million, because he’s just going to do yield curve control, you know, printing money, immediate, 300 basis point cuts all sorts of things. So I think, you know, trumpet best have laid out exactly what they want to do, run it hot, inflationary, all these sorts of things. Powell is the only thing standing in their way. And, you know, come hell or high water, Trump will get what he wants. The question is, you know, how difficult is it, whether he has to file fire Powell or, you know, there’s just ways to do it.
Maggie Lake 9:09
This month, we’re bringing you top tier research in a free silver investment report. To claim your free Silver Investing report, simply click on the link in the description below. And if you’re looking for a simple, secure way to invest in physical gold and silver, check out hard assets Alliance at hard assets alliance.com speaking of silver, wealthion will be on the ground at the SCP resource finance global silver conference this October in Toronto, where Eric sprout will deliver the keynote Address. It’s going to be a major event for silver investors. So stay tuned for more details in the weeks ahead.
Christopher Perkins 9:46
So then we have the genius act, right that gets passed and like besset was out there today saying how he’s going to, you know, this is going to be the greatest thing ever. We’re going to export the dollar even more. We’re going to have everyone around the world buying treasuries. It sounds. Was, like, your thesis, like, how do you think about that? I mean, what’s going to be the impact of the genius build, and how long is it going to take? Are we just going to see an absolute proliferation in stable coins? And then how’s that going to impact macro? Because my personal belief is that stable coins are an incredible store value. If you’re in the developing world, they don’t want Bitcoin, they want dollars, but they want yielding dollars. So they’re going to end up going into defi and they’re going to try to regenerate that yield, and then all sudden, they’re gonna be like, well, let’s have an agent do it for me. But my thesis is that we’re going to see the dollarization of the world. Am I? Am I on the right track? How do you think about the impact in the near term and the longer term impact on the genius bill? And of course, like less than saying, I’m going to just issue these things to keep short term treasury yields down.
Arthur Hayes 10:45
Yeah. So, I mean, I’m actually writing an essay, not specifically on the genius act, but on sort of a stable coin thesis right now, and I’ll be presenting this in Japan, and I’ll publish it afterwards next Monday. And so basically, I lead with sort of a a meme from Silence of the Lambs. If remember, there’s a serial killer, Buffalo Bill, and he’s standing over the pit where there’s a woman or man, whoever, who’s down there, and he says, it puts the lotion on its skin, or gets the hose again. I changed the meme. I gotta put Bess face up there, and it’s gonna say it gets, you know, it puts the dollars on its skin, or it gets the sanctions again. And
Arthur Hayes 11:26
so I think essentially, there’s two pools, and
Arthur Hayes 11:30
you mentioned one of them, sort of these foreign retail deposits. There’s two pools of money, which I think best via monetary policy and aggressive use of terrorizing sanctions can make people on board in the stable coins. The first is the Euro dollar market, right? So, you know, 1950s and 60s Euro dollar market was created because of all the regulations and prohibitions around interest payments and trade flows that the US monetary authorities are putting on commercial banks. And so you have these foreign branches of US banks and foreign banks saying, hey, I’ll take your dollars outside of us control. And so we have this 10 to $13 trillion market, which nobody has any control over. Oftentimes influences Fed and Treasury policy in terms of when dollars become expensive and cheap in the Euro dollar market. And you can probably trace almost every financial crisis outside of the United States to Euro dollar market flows. And now these these flows are not doing what best it wants them to do. He can’t control them. He doesn’t know where they are, and he can’t make them buy what he wants, which is treasury bills. So my idea, and you know, maybe he’ll do this, or maybe he won’t, I don’t know, is right now, why do you feel comfortable in a euro dollar? Because every time your banking institution has gotten into trouble, the Fed the Treasury bails you out, even if technically they shouldn’t be doing it. So because you’re not a member of the discount window, don’t follow us regulations. But you know, we can point to many, many, even 2008 the Fed secretly bailed out all these foreign branches of banks for all their bad trading policies to make sure the Euro dollar depositor was sweet. So the first thing peasant should do is say, hey, guess what? If you don’t have your money in a US branch of a bank or a US Bank inside of America, you do not have a guarantee any longer. We will not come and save you anymore. So all of a sudden these dollars like, oh, okay, well, there isn’t this blanket government guarantee from the Fed and the Treasury for these trillions of dollars that I have deposited on these banks, but I could put my money into a stable coin, and a stable coin means that the dollars are either a deposit at a US branch of A bank in America, or they’re holding treasury bills. So if you don’t feel safe in your Deutsche Bank account in Switzerland or wherever, just talk to your authorized participant and move these deposits over to a stable coin. And now you have access to your dollars. You have the blanket guarantee of the US government. And guess what? You might earn a bit of a yield on, on your money, because we probably don’t get much of a yield in a Euro dollar deposit outside of America, because the banks don’t actually need your money and they have to pay capital charges because they’re basil free and blah, blah, blah, right? All the, all the bad things about why banks don’t like large deposits. And so now you have, you know, a 10 to $13 trillion tam of money that could flow into stable coins from abroad, and once you’re in a stable coin, Bessin has full control. He knows where you are, know which bank he you know. He knows where you’re clearing your treasuries. And the best part is he can offer you a yield that’s lower than Fed funds. So if Fed funds is four and a half, he could say, Oh, guess what? I’ll give you two on a six month t bill, and you say, Well, I can’t really do anything about that, because I’m not going to go into a US bank, bank deposit. The banks don’t even pay you anywhere close to Fed funds, so fuck it. I’ll just buy the 2% that Besson offers. So best again, and one fell stroke, completely new to the Fed, and no longer does the Fed have any control over Fed Funds. Because Bessin can offer the treasury bill at whatever price he wants, unconstrained by what Powell, whoever his successor, does. That’s the first pillar. And the second is what you mentioned, right? You have a lot of retail around the world in developed and developing countries. I live in Asia, and basically the entire investment game out here in Asia is, how do we get local currency into dollars so that they can buy higher yielding assets and equities? That’s literally all of finance in Asia. And then every so often, the regulators come after people, and they basically put the young guy in jail, and the boss stays, stays sweet as they do. And that is the game. So best I could say, Okay, guess what? We’re going to deputize Elon Musk and Mark Zuckerberg and give them protection to go and offer a stable coin big account through their WhatsApp, your Instagram, your x account. And we don’t care if a foreign regulator, whether banking or internet regulator, says we don’t like this, we don’t like that, you’re basically giving $1 big account to our entire, you know, underclass or anyone who’s not a wealthy individual, and you know, they don’t care, because they’re sitting in Hawaii and Austin, Texas, and Trump is protecting them. And if you go and you try to remove access to Facebook or X, guess what? Sanctions, just like what he would Trump threatened with Europe when they had their their digital information act, or whatever it is. And then furthermore, Besant finally has a sanctions weapon, right? So if you’re in Asia or a lot of developing world, all the elites essentially steal from their people and put their money in US banks in some way, shape or form. And so guess what, president or prime minister or parliamentarian, if you don’t allow Western social media companies to bank all of your people with dollars, I’m going to sanction you, and you’re going to lose access to the billions of dollars that you stole from your people. And so guess what’s going to happen? Nothing. And so I think that is how you’re going to get, you know, sort of like 20, $25 trillion tam of money that could flow into dollar stable coins. And I think they’re hinting at this already in terms of, you have the major social media companies saying, Oh, we’re investigating stable coins, and this, that and the other thing, and Besson is very pro on them. And then, basically, what’s a stable coin do? They’re going to buy treasury bills, and they’ll buy whatever yield Besson offers. They could completely destroy the Fed. He can put, you know, short term rates wherever he wants it. And now he’s got a sink of 10s of trillions of dollars that he can essentially fund the US government with until they do some sort of yield curve control to bring down the long end. So I think that’s, that’s what I would do if I was best in now, I think they’re on the path, whether or not they get there, who knows,
Christopher Perkins 17:39
total, totally hear you on that one. I mean, in that scenario describing it’s got to be very bullish for crypto. Would you agree? Yeah, of course. Because
Arthur Hayes 17:47
when, when I have a on chain dollar deposit and I’m running 2% Well, you know, okay, Athena offers me five to 10% and they’re just doing sort of a cash and carry basis yield, and probably the safest endogenous yield within crypto. Or, hey, I want to spend my money at the local 711 Well, there’s ether, fine. I have a cash card, I guess, deposit my stable coin, and they give me a virtual card on my mobile phone, or they send me a physical card. I just tap and pay. And now I can spend my stable coins in an offline manner, as if I had a credit card. And then, you know, finally, I can trade it. Right now, I have this collateral that can trade any type of crypto asset on any decentralized exchange within a few clicks. And now I’m in the system. I understand how this works, because I have this massive savings deposit that is earning me some yield, and I’m going to trade it, I’m going to collateralize it, I’m going to lend it, I’m going to borrow against it. So I think it’s massively positive for defi and TVL, you know, should go into the 10s of trillions pretty quickly, if you know the US monetary authorities follow through on this national policy of pro stable coin. And Let’s shove dollars to all these places in the world, which otherwise we couldn’t access before and the analog tradfi system.
Christopher Perkins 19:01
Yeah, so bullish Bitcoin earlier, you mentioned Athena. And I’ll be honest, the one thing I’ve been in crypto for full time for about four years, got into it earlier, and the one thing that I continue to struggle with, personally, is unlearning, right? And so like, when the Athena guys came to me the first time, I’m like, I was like, This is wrong. You’re not a stable coin. And I missed it completely, because what they did was they were tokenizing a basis trade, which has been a ubiquitous strategy for years and years and years. I couldn’t get over my own self. But in what they did was brilliant, because they took a narrative and they packaged it, and they were able to issue something that was available to the masses. But Athena is going to be good. Bitcoin is going to be good. We haven’t got to so many other projects. You just said. Defi is going to be in a good shape. Are there particular defi protocols or tokens that you like against this backdrop? Yes.
Arthur Hayes 19:50
Disclaimer, I own a lot of this shit, right?
Arthur Hayes 19:53
So please,
Arthur Hayes 19:56
please be cognizant of that fact. So I. In terms of the trading space, I think hyper liquid is probably my number one bet there for decentralized exchange. Decentralized exchanges have been around for a very long time. There’s been various projects that have then been successful over the years, but hyper liquid has been the best so far, with a small team, Jeff has been able to, you know, hit like $30 billion of trading volume over a day a few days ago. And the best part about hyper liquid is they’ve rolled up this permissionless ability for Pete, for developers to launch their own such a limit order book, perpetual swap markets. So now, as long as you want to operate a front end, it’s almost like the the online gambling thing, right? There’s one company that basically creates all the games. Every other thing you see on the internet is basically as a marketing company. You know, they change the colors, you know, they’ve got top of the funnel analysis, blah, blah, blah. They all sell the same games that’s that are owned by the same company. I think that’s gonna be like hyper liquid. Everyone’s gonna have sort of a front end to appeal to their particular market that they know how to market to, and they might offer a certain sort of incentives, but at the back end is going to be this high performance, decentralized, Central Limit order book that’s literally just tech. That’s the Holy Grail. Many people have been working on it. I think that the hyper liquid team is probably the closest to actualizing that, and then they’re also getting into the the new issue market. So the big thing in crypto, where exchanges make a lot of money, is offering new tokens, and it’s pretty fucked up process, because me, as an advisor to token projects, I have all these projects, and they’re handing off 510, 15% of their tokens apply to the large, centralized exchanges to get access to their clients, and it’s a bad deal for the rest of the token holders, because there’s less tokens left to and such advice people to use the applications. And so I’ve been on my you know, high horse, trying to tell projects, why? Why? Why are you paying this exchange all this money? But now there’s hyper liquid, and they showed how potent their offering was with the pumped up fund launch. They launched a pre market, perpetual swap, which traded, which was the largest trading perp, pretty quickly, they allowed people to receive their, I believe, their pump allocations through hyper liquid, and then all subsequently launched the spot market, which was, I believe, the most liquid spot market, or is the most liquid spot market for pumped up fund. So I think, and it didn’t cost projects 10% of their circulating supply to get access to this. So we’re going to see a democratization of the new issue market. We’re going to move back towards of a 2017 more free flowing Ico situation powered by hyper liquid. I’m sure they’re going to have some copycats doing this as well. So it just reduces the fees and the friction and ecosystem. So that’s the exchange to beat. And the best part about hype is they take 95% of their their PNL, and they buy back their token, and so you basically have this billions of dollars of money that’s going to flow back into the hype token, and it’s going to help make the traders who are trading wealthy on this platform. So I think that’s a good one. Ether, five, as I mentioned, sort of this Neo bank, a cash card. How do you spend your crypto offline? If you’ve got all these stable coins now, what do I do with them? They’re going to help with that. So those are the three main things and but obviously, like DFA in itself, the TVL is going to go massive. There’s gonna be all sorts of different projects are going to do well, but I think that people need to make sure that if the project’s doing well, make sure that they’re that P L, that profit is making its way back into the token holder. So I think there’s a lot of projects out there who are great projects, have good product market fit, have users spending real money, but then they’re stingy with the token. They don’t take the money that they’re making and pass it back to us, the token holders, and I think that the market’s going to continue to start really punishing these projects. Like, okay, you don’t you do well, but your tokens not going anywhere until you start buying it back or paying out some sort of continuous yield if I stake your token, which I think is great, because that’s the whole point. US, the users, need to get wealthy as we make these product protocols very well used. So I think that’s my sort of mental map for this sort of defi explosion over the next two to three years.
Maggie Lake 24:08
If you have any questions on how to navigate the current environment, wealthion can help connect you with a vetted advisor to get a free portfolio review, just click the link in the description below or head to wealthion.com/free
Christopher Perkins 24:22
Yeah, those those are great projects. I totally agree. Jeff’s a great guy. Full disclosure, weren’t many of these projects as well. In fact, in ether five, we, we led their series, a mike and the team are just, are just lights out. Your derivatives guy, I have a derivatives background. Derivatives are the most lucrative instrument when you have an exchange. I mean, there’s a reason why I spot niZi right as we pivot towards Solana, which was supposed to be and is attempting to be, the decentralized NASDAQ. Where does that leave that ecosystem in your mind?
Arthur Hayes 24:57
Well, it’s the same as any other i. A smart contract blockchain, I’m not gonna say layer 123, doesn’t matter what layer you are. Solana had product market fit with meme coins. And that was what drove the, you know, really the the narrative from $7 so it was like 280 or whatever it got up to now you have, you know, Tom Lee on, you know, Western financial media beating the German ether and Joe Lupo. We’re gonna get to that. And so I again, they’re all competing for the same thing. We all do the same thing. You could say one’s faster than the other, one’s more secure than the other. You know, pick, take your pick. If you’re very deep in these protocols, you could probably make an argument why yours is the best for most of them, it’s just going to be dependent on where the clients so Solana needs to find a standout application that’s going to have lots of users are going to drive transaction flows. If meme coins come back, maybe that’ll be it. I don’t know what that sort of that catalyst is going to be, but I think that’s a challenge for Solana or any other blockchain. Ethereum is a bit different because we think about it, basically every single major category defining project in defi starts on Ethereum. They don’t start on any other network. Ethereum has the most developers, has the most commits. Yes, Solana is number two, I believe. But again, they have a mind share that everyone else is trying to compete against. And so I think that’s just going to be challenging for all these other blockchain especially, you know, if eth starts breaking through 5000 and you get sort of this, like, max of eth Bull Run, like, what is it that they’re going to offer to the mind share to get traders to buy their token.
Christopher Perkins 26:43
Yeah. I mean, you have to tip your hat to eat the way they’ve totally restructured the EF they’ve launched etherealize. They’re on offense. But I’m dying to ask you this one you mentioned Tom Lee bit mine, this dat craze. You know, we had an interview with one of my partners recently. We went through dats digital asset Treasury companies. What is your take on on dats? You know, where are we? Where are we going? You know, how does this story play out?
Arthur Hayes 27:11
So I think at the end of the day, this is a everyone’s trading the forward on, sort of the MicroStrategy play. So, yep, obviously sailor has hit it perfectly out of the park. I think is he in the NAS, if you have 100 whichever index, I’m not sure which one he’s in, but that’s the goal, right? It’s get the passive indexers to have the set it and forget it flows, right? I think the Capital Group is like one of MicroStrategy largest holders who would have thought capital there’s like stodgy long only fund manager owns. Like, what are the most you know, leveraged, financially engineered equities in the world. But there it is. Yeah, I think it’s some, some insane amount of flows. But Why could they have to? They have an index. The index says this, I have to buy these stocks, whatever’s in the index. I don’t care about any other metrics in the business. And you could say that’s bad thing or good thing, or good thing, but that’s just passive investing, and that is the ecosystem in which Western financial markets are in. And so that is what these dat companies, at least as ones that are going to be successful, who will have an M nav above one for a long period of time? That’s what you’re trading. You’re saying, I’m a retail investor. These things are not in the index yet, but if this company is able to have a certain amount of average EV trailing volume, if the market cap is above a certain level, if their, you know, industry on Bloomberg is x, then this cohort of fund managers has no choice but to buy this stock and make it even hate Bitcoin and think it’s going to zero or whatever the shit coin is that it’s in in the treasury. It doesn’t matter their job as a fiduciary is to match the index, yeah. And that is the play, and that’s all it is. That is why people are paying $2 for $1 of earnings or assets. That’s it. And so I don’t know how successful any of these debts will be. Obviously, I’m an advisor of up xi, and this will be my advice to that particular companies understand who it is. Is your end buyer, and it’s not, you know, Robin Hood retail muppet. It’s, you know, dude in a Brooks Brothers suit in Connecticut at the golf course who doesn’t know anything other than, like, just buy the index. That’s it. Because once you get into that flow, it doesn’t matter what your company does, as long as you’re not committing fraud or doing something else, the stock market is going to go you’re going to get inflows. And so I think that’s the challenge for all of these DAC companies, is to get their trading volumes and their market caps high enough so they get included in the indices. That’s the game.
Christopher Perkins 29:41
Yeah, yeah. I think they have some structural advantages, though, over like ETFs as an example, because, you know, some of these assets, you mentioned, eth, even Solana, or whatever, they have natural organic yield, right, which you really can’t take advantage of in pure form. Currently in the ETF, maybe in the future, if you launch an ETF on an LST or something, you could do it. So it seems like they’re not. Stasis is above an M would be, would be superior to the spot asset. You know, many things being considered. You know, cost of management, compliance, etc. So going forward, you think there’s going to be, you know, there’s this race to being in the indices, as you’re suggesting. Is there going to be one or two per token? Like, how far out on the curve are we going to go? How should people think about as they’re doing their own research and think about investing these things? Where does it stop? Like, can you just develop that a little bit further? I
Arthur Hayes 30:30
mean, it stops when you can’t get into the index selection criteria, and I haven’t really done a lot of deep dive on like, yeah, obviously you have passive indices, specific indices, like Russell or whatever, then you have all these, like pseudo active, managed thematic funds, like, you know, Vanguard X, whatever, some technology thing or whatever, right? So, like, if I was a retail investor putting a lot of money in this for long term and not just a momentum trading thing, you’d be, okay, well, let me identify the pools of money where I think that one of these could be included into, okay, what are the rules? What are the dates? Understand, like, what companies come in, what companies go out? Like, it’s, you know, I mean, I didn’t trade this Well, I was at City of Deutsche but it’s like a rebound trades, right? What’s going in the index, what’s going out, what are the flows? Let me make a prediction on that. Okay, I’m willing to pay this premium for this particular stock. Obviously, as we’re humans, we want to treat the most liquid thing. So it’s going to be a power law distribution in terms of who’s gonna be successful. So we might have one or two successful debts per security per per crypto. And so then it’s obviously comes down to a, you know, marketing game, who’s showing the loudest, who’s on TV the most, and that’s why, obviously, everyone is showering money on bit mine, because, you know, Tommy is the main character right now in the East space. And that’s what has to happen. Because, you know, I’m going to trade an eth that there’s multiples to choose from. Which one do I know? Oh, I know. Bit buying, because that’s autonomy on TV. Okay, I’ll buy that one, right? That’s the simplistic sort of thinking that an investor is going to happen. But again, we’re all literally trading this forward of, okay, when the index inclusion comes up in 612, months, or whatever it is, okay? Does bit mind get included in Russell 2000 or you know, technology fund, whatever x that’s that’s the goal. Yeah, one
Christopher Perkins 32:26
of the biggest gaps, I think, in market structure to date has been futures and derivatives like it’s in the US, because of lack of certainty. There are very few futures that trade is essentially Bitcoin and eth. But my sense is that the new administration is going to allow the futures market to proliferate. We have some problems right now with the CFTC. There’s nobody home right now, you know, because that unlocks the basis for one of the things, when I talk to folks out there, they’re like, hey, tradify can’t go long. A lot of this stuff because they can’t hedge, and there’s no basis trade. And you need futures, you need swaps to come on board so that they can take advantage of the basis and really scale it as these hedge funds leg in before you probably get to that state that you’re suggesting. What are your thoughts you built one of the first and most impressive derivatives exchanges. How do you think the derivatives markets are going to develop here in the states in the coming months and years even,
Arthur Hayes 33:19
I mean, and that sort of in the weeds, and sort of, What the How is Coinbase doing with their launch of their purpose? I know it’s not technically a perp, it’s some sort of thing. And I guess to some extent it doesn’t really matter. But, like, I think the problem is going to be, what’s, why do people trade these things, right? Retail Investors trade these things. And then the, you know, the jumps, the virtues, the citadels, they get involved. They want to basically take the money from bad traders. That’s literally all it is, right? So if all the bad traders are, hey, I got this new thing called defy, and now I’m used to it. I’ve been doing it for four or five years. I don’t necessarily need to always trade on Robin Hood or Coinbase or whatever I’m perfectly happily trading on a hyper liquid or some other platform around the world. Do I really want to trade on on these other platforms? I think that’s really the question. How sticky is a retail flow in the US? When, even if you have, you know, feature parity across the ecosystem, are they going to be around anymore? If I don’t know, I don’t know the answer to that question, because if you see a lot of US retail, which literally is the profit engine for all of these hedge funds, who they’re going to then provide liquidity to all these derivatives that help other people hedge if they’re not there, then the market dies over time. And I think it’s going to be a lot harder story to sequester this capital within the United States when you have the entire internet that’s open to doing other different things. And I don’t think we’re there yet, or anywhere close, but that’s the the major question I would have for the the microstructure of of the market is where the. Tell are they gonna stick around in these centralized platforms? If not, then I think the the assumption of, you know, all these, like, you know, see me, having 50,000 perps isn’t really gonna matter because, you know, virtue doesn’t want to trade against citadel. This isn’t what the game is about.
Christopher Perkins 35:16
That’s not how they do it. So you think the purpose markets gonna be the driving derivatives market here in the States, not, not listed.
Arthur Hayes 35:25
I mean, I, I don’t know the list, the volume, the list of futures on see me versus purpose on Coinbase. I don’t know the ratio. Yeah, interesting. And then I mean the margin, the right now, the margin rules are all, are all kind of fucked up as well, right? It’s just too expensive to treat these things, and you have to re basically redo the entire was a dol market, whatever the clearing market in the United States, because right now, the clearing market cannot support a socialized loss, automatic auto de leveraging model, which all of us use outside of the United States, which is way more capital efficient for the retail trader than the analog model. So if they’re not willing to go all the way down to the bedrock of what it is, what is a derivatives market? How do you clear a derivative? Why is it that I pass a fucking PDF around on Friday night and it opened on Monday morning, right? And I have this like, jump risk in my and my risk metrics when I have an asset, you know, 100 vol asset, it just doesn’t work, right? And so I think that unless the CFTC or Trump or whoever is willing to really go and completely change everything from clearing all the way up to, you know, the broker level, good luck. It’s just going to be some Frankenstein product. It’ll do well. I mean, people are gonna make money, no doubt, but it’s not going to impinge on the globally significant flows. It’ll be happening outside of the US, in a market that has built itself around a bear asset at 24/7 that’s highly volatile, and the real customer wants the high leverage, but they’re willing to give up this sort of guaranteed settlement sort of situation.
Christopher Perkins 37:05
Cool, man. So we touched on a lot of stuff today. Sounds like you think the money printer is going to keep printing? Super bullish, despite some maybe macro noise, super bullish across the projects you’ve discussed. What are you looking at in the future. You know, what are you paying attention to? You have the you have the stable coin piece dropping next week. What are you looking out for in the next few months, that’ll change your approach to how you trade?
Arthur Hayes 37:33
I mean, at the end of the day, it’s coming down. The question of, sort of, what is, how badly do Trump at best and want to keep the Republicans in office in 2028 Yeah, I think if you had an election today, I think it’d be 5050, and whether they’d stay in power, it’s, you know, it’s a pretty evenly split country. I think Trump knows what he has to do. He’s got to print the money, he’s got to hand out the goodies. And so the question is, how quickly is it going to hand out the goodies? What is the method at which they’re going to do it. It sounds like, you know, Bessin and him are on board with doing it. Question, how quickly is it going to happen? It’s going to happen whether it’s today or a year and a half from now, the desire is there. And, you know, no government ever when they have had the printing press refuses himself the ability to print money and hand out goodies to the people to win elections, that just doesn’t happen. So I guess think it’s a structurally long trade. I know people are worried about sort of the four year cycle in crypto, like, oh no. Like, you know, because of things historically, but we’re in a different situation. We have us versus China economically, hopefully not militarily, combating you have two different systems, but this but at the same underlying impetus, which is credit creation. China is very adept at creating credit to hand it to. Who ever does what Xi Jinping and the Communist Party wants? Trump was going to do the same thing. Who does what I say they’re going to do? Okay? Well, I’ll hand you some credit, whether it’s through the big system, whether it’s through Fannie and Freddie, whether it’s through yield curve control, whether it’s through Central Bank swaps, like there’s so many tools that they have at their disposal. And I think, you know, they’re just getting started in the ways in which they’re going to hand out credit to those who do what they want them to
Christopher Perkins 39:19
do. Awesome, man. Really, really appreciate you coming on incredible interview, and I really appreciate your time, man. Thank you.
