Original Article Title: "Key! Your Cryptocurrency May Not Increase Anymore! But These Assets Could Buy │ Arthur Hayes │ Bitcoin Conference Vegas 2025 feat. ⁨@TheDavidLinReport"

Original Article Source: Bonnie Blockchain

Original Article Compilation, Translation: DeepTech TechFlow

· Guest: Arthur Hayes

· Hosts: Bonnie & David Lin

· Air Date: June 16, 2025

Key Points Summary

In this podcast episode, the inventor of cryptocurrency perpetual contracts, Arthur Hayes, discusses his expectations for the future economy. Having spent most of his career in Asia, he has an in-depth understanding of Asian financial markets. He straightforwardly addresses financial questions that most Asian politicians cannot answer. How does he view the future trend of the crypto market? Why does he think most of the altcoins in your portfolio will never surge again? How does he assess the price trend of Bitcoin?

Highlight Quotes

· The price of Bitcoin could reach $250,000 by the end of this year.

· Retail interest in Bitcoin remains significant because of its outstanding performance, and Bitcoin is the most easily understood among all crypto assets.

· Most altcoins this year may not see further gains because they lack "product-market fit," meaning their products cannot meet market demand, and these projects usually lack revenue to reward 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 altcoins, focus mainly on the "Narrative," which is the story behind a project and the logic that attracts investors.

· When buying altcoins, maintain rationality and avoid blindly following trends.

· The relationship between the US and China will gradually drift apart, but it will not end as quickly as some predict.

· Most traders are not truly concerned about whether a platform is fully decentralized; they value liquidity and a wide range of trading products more.

· There is not much innovation in the products of various exchanges, and their fees are essentially the same. Therefore, the core of competition lies in marketing.

· There may be many conflicts between generations, and governments are likely to choose to print a lot of money to address this issue. For governments, this is the simplest and most direct solution.

Bitcoin Price Forecast

David: Can you please elaborate on the timeline for Bitcoin reaching one million dollars in 2028? You mentioned earlier that Bitcoin's price is expected to reach $125,000 by the end of this year, is that prediction still valid?

Arthur Hayes: I still believe that Bitcoin's price can reach $250,000 by the end of this year. Although there may be some volatility along the way, that is my year-end target. As for the prediction of Bitcoin reaching one million dollars, my assumption is based on the potential printing of around $9 trillion in currency by major global economies in the coming years. For example, the U.S. government is planning to support institutions allowed to create mortgage loans, and they are expected to print $5 trillion.

In addition, with the implementation of a supplemental leverage ratio exemption policy, the banking system may purchase up to $1 trillion in assets, including assets sold by foreign investors. I believe the banking system will become more agile as a result, no longer needing to worry about capital requirements related to government bonds, and can instead provide more loans to the U.S. real economy. This will lead to industries such as manufacturing receiving more credit support, which will ultimately flow into the cryptocurrency market.

David: When the Federal Reserve implemented quantitative easing in 2020, we saw almost all asset classes rise, not just Bitcoin. This was indeed positive for Bitcoin, but from your analysis just now, it seems that this could also be good news for other assets like stocks and gold. Why do you think Bitcoin will outperform other assets in this scenario?

Arthur Hayes: The main reason is that Bitcoin's supply is fixed, with a total cap of 21 million coins. Moreover, in terms of market capitalization, the Bitcoin market is relatively small, so when a large amount of capital flows into a relatively small market, the price will rise rapidly. This is also why Bitcoin has been the best-performing asset in the past 15 years. Compared to stocks or gold, Bitcoin's scarcity and decentralized nature give it a unique advantage in dealing with currency devaluation and liquidity flooding.

Bitcoin All-Time High, Retail Interest Fading?

David: The market is evolving rapidly. Do you think the current monetary easing (money printing) will trigger more "Degen" activity?

Arthur Hayes: Yes, I agree. If you don't have too many financial assets but are watching inflation erode your purchasing power, you may choose to use a small portion of your savings for high-risk investments to hedge against this situation.

David: Why does "Degen" activity seem to have decreased compared to 2021? I'm referring to retail interest in altcoins. In fact, some people have noticed that the current viewership of cryptocurrency-related channels is significantly lower than four years ago, despite Bitcoin and many other crypto assets reaching new all-time highs.

Arthur Hayes: I think the main reason is that many altcoins have not performed as expected. They have pricing issues and are often overvalued. When you dig in and ask, "Well, your project has launched, the hype is over, so where are the users? Where is the revenue?" the answer is often "We have nothing." Yet, the fully diluted valuation (FDV) of these projects could be as high as $5 billion. In this scenario, how do you make its value increase tenfold? That is very difficult. Going from $5 billion to $50 billion is relatively easy, but going from $100 billion to $1 trillion becomes very challenging based on marginal pricing. So, I believe that the prices of these altcoins are generally too high, making it difficult to attract new investors.

David: Some say that Bitcoin is now more seen as an institutional investment tool, so retail interest in it is waning. Do you think this claim holds water?

Arthur Hayes: Retail interest in Bitcoin is still significant because of its outstanding performance, and Bitcoin is the most easily understood of all crypto assets.

Your Altcoin May No Longer Rise

Bonnie: Everyone is talking about whether the altcoin season will come? Some say that there are too many low-quality projects in this cycle. What is your view of the current situation?

Arthur Hayes: I think most altcoins this year may not rise again because they lack "Product-Market Fit," meaning their products cannot meet market demand. Additionally, these projects usually do not have revenue to give back to token holders. In other words, they are more like high "fully diluted valuation" (FDV) and low circulating supply risk-tokens. This type of token's performance usually isn't great. So, you will see some projects like Berachain and Monad whose prices have been almost constantly declining. Although these projects have a large funding scale and high hype, because there are no actual customers willing to pay for their products or services, the prices are challenging to increase. However, there are also some excellent projects that have indeed achieved product-market fit, where users are willing to pay for their services or products. These funds flow back to token holders through the protocol. I believe projects that can do this will perform well, such as Pendle and Ethfi.

Bonnie: So, in the last cycle, those venture capital-supported tokens performed very well. Why is it different this time?

Arthur Hayes: The main reason is still the lack of product-market fit. If a project is highly valued but in reality, no customers are using its blockchain or product, then reigniting market interest after a price drop becomes very difficult.

Bonnie: I remember you mentioned in a previous interview that Bitcoin's market dominance could reach 70%. Do you think that will usher in an 'Altcoin Season'?

Arthur Hayes: Yes, I still believe that scenario will occur, perhaps when Bitcoin's market dominance is around 65%.

David: So, is it possible for other cryptocurrencies to outperform before Bitcoin reaches that target?

Arthur Hayes: Currently, that doesn't seem likely. I think Bitcoin's market dominance is heavily reliant on Ethereum's performance. If Ethereum's price and market activity do not change significantly, then it's hard for Bitcoin's dominance to experience major fluctuations. Currently, Ethereum's popularity has declined, and many investors have lost interest in it. So, if the market cycle shifts, I would be more inclined to bet on Bitcoin rather than other assets.

How to Choose an Altcoin?

Bonnie: How do you personally select altcoins? What aspects do you usually focus on?

Arthur Hayes: I mainly focus on the 'Narrative,' which is the story behind a project and the logic that attracts investors. The current market emphasis is more on whether a project can generate stable cash flow. If a project can bring in a significant cash flow, that is very important to me. Additionally, I also look at whether investors can receive actual returns by holding the project's token.

Bonnie: What about valuation? Do you pay special attention to that?

Arthur Hayes: For projects in the early stages, we usually set a very clear investment cap to ensure we do not pay an inflated price. But for projects with good liquidity, I am more concerned with their ability to generate stable cash flow.

Bonnie: Don't you think that the "narrative" is changing too fast? It feels very challenging to keep up with the pace.

Arthur Hayes: Indeed, but if you buy in at the right price, then it's not a problem. If you can get in at a low enough price, once the project goes live, you are likely to profit. However, if you buy in at a high price while chasing market trends, trying to participate in every hype project, the end result is often a loss. The key is to stay rational, avoid blindly following the crowd.

The Inventor of Cryptocurrency Perpetual Contracts

Bonnie: Could you briefly share what inspired you to design perpetual contracts? How did this idea come about?

Arthur Hayes: In fact, this idea stemmed from customer feedback during our early operations. My co-founder and I were responsible for handling all customer support requests and found that many users could not understand traditional futures contracts. They were often confused about why futures prices would differ from spot prices and why futures contracts had expiration dates. These issues not only puzzled users but also consumed a significant amount of our time in explanation.

Therefore, we began to think, could we design a trading product that has no expiration date and offers high leverage? This was the original intent behind creating Perpetual Contracts. After several attempts, we finally designed a product that was easy for users to understand and officially launched it in May 2016. Initially, most people were not interested in this new product, but over time, more and more people started using it because it addressed users' actual problems and also relieved us of the burden of repeatedly answering questions.

I personally do not usually engage in leveraged trading. When I invest, I basically buy spot assets directly. I would recommend leverage trading to those who have enough time to research the market and are skilled at trading. However, if you do not have time for in-depth research and lack patience, it is best not to use leverage as the risk will be high.

Bonnie: If I intend 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 clarify your goal. You need to be clear about what you want to achieve, such as how much return you expect, how much risk you can tolerate, and under what circumstances you will stop loss or add to your position. These need to be planned before the trading starts. Because once you enter the market, emotions can easily affect your judgment, and this often leads to wrong decisions. Being well-prepared is the key to successful trading.

Will the US Government Really Step in to Buy Bitcoin?

David: You mentioned a potential risk that if the Democratic Party wins the next presidential election in 2028, they may cancel the US Bitcoin Strategic Reserve. If the strategic reserve were indeed canceled, do you think the market would face significant selling pressure as a result?

Arthur Hayes: It's possible. This largely depends on how much Bitcoin the US government has actually accumulated and the state of its finances at that time. I don't believe their holdings would be as high as 200,000 bitcoins (the amount of Bitcoin the US government has obtained through legal seizures). If the government is under budgetary pressure, these bitcoins are likely to be sold. So, there is a lot of uncertainty here, but it could indeed serve as a source of funds.

David: Do you think they could, in turn, buy more Bitcoin? After all, they haven't done so proactively thus far.

Arthur Hayes: I think it's politically infeasible for the US government to actively purchase Bitcoin. When the government allocates fiscal funds, it typically chooses projects that directly benefit the majority of people, such as tax cuts, bridge construction, or hospitals, rather than investing in an asset held by a minority. In theory, the US government could do so; anything is possible. However, from a political perspective, it's not a wise choice. If the government has a large sum of money to freely allocate, spending it on Bitcoin is clearly not the most voter-friendly option.

David: But the government has won votes through other policies, so they don't need to do such a thing.

US Financial Regulation and Money Printing

Bonnie: You mentioned that the US may implement capital controls. Is that so, especially regarding foreign investors' asset ownership?

Arthur Hayes: Yes. I believe they may start with the repeal of the "withholding tax exemption." Under the current policy, foreign investors holding US Treasury bonds do not need to pay a 30% tax like local investors. If this policy were to be repealed, it could reduce the attractiveness of US Treasury bonds for foreign investors, potentially redirecting funds to other investment channels. I believe this trend may gradually emerge.

Bonnie: Does this mean that the market will crash as a result?

Arthur Hayes: No. Even if foreign investors withdraw their funds, the U.S. government will fill the funding gap by printing money, thus avoiding major market turmoil.

David: In fact, in early April this year, we saw a similar situation—both bond and stock prices fell, Bitcoin's returns dropped, while bond yields rose. So I want to ask, if the U.S. does indeed implement capital controls, will it trigger a similar market reaction, causing a decline in asset prices and reducing liquidity in the U.S. financial system?

Arthur Hayes: I believe capital controls will be implemented gradually, so they will not cause severe market fluctuations. The government is aware that sudden policy changes could lead to unintended consequences, such as drastic turmoil in the bond market, or even spiraling out of control. If capital controls are gradually implemented, they will find other ways to fill the funding gap, such as having the Federal Reserve, Treasury Department, banking system, or certain private institutions allowed to create credit at low cost take over assets sold off by foreign investors.

David: Recently, we have seen the correlation between stocks, bond yields, and Bitcoin reappear. Do you think this correlation will continue?

Arthur Hayes: I don't think so. There may be some risk aversion events in the future that will lead to increased market volatility. In such a scenario, Bitcoin may play a greater role as a risk hedging tool.

Buy All Assets? Buy Non-U.S. Assets?

Bonnie: You previously mentioned "buying all assets to experience the American way of life." Later, you talked about the "breakup" of the U.S. with global capital. Do you think this relationship will continue, or will it eventually lead to a split?

Arthur Hayes: I believe the relationship between the two will gradually drift apart, but it will not end as quickly as some predict.

Bonnie: So when do you think this "breakup" is likely to occur?

Arthur Hayes: It may take decades.

Bonnie: So, if foreign capital truly starts to exit the U.S. market and flow back into local markets, what kind of impact do you think it will have on the global economy? What specific scenario could unfold?

Arthur Hayes: Currently, foreign capital is flowing into the U.S. because the U.S. market has been relatively strong, attracting significant investments in stocks, bonds, and real estate. If this capital exits the U.S. and returns to its local markets, the U.S. market performance may be affected. As for emerging market countries like Indonesia or Thailand, this could present an opportunity. The repatriation of funds would drive the appreciation of these countries' currencies, increasing local consumers' purchasing power. With an increase in purchasing power, people may choose to invest and start businesses in these countries to meet the new market demand. This shift could make emerging market economies more vibrant and drive growth.

U.S. Stablecoin Legislation

Bonnie: Regarding the stablecoin legislation, do you think this will force stablecoin issuers to buy more U.S. Treasury bonds?

Arthur Hayes: I don't think so. I believe this legislation is more about allowing banks to engage in Tether-like activities. If I were a bank and could now create my own stablecoin, I could essentially take in deposits at zero cost. At the same time, if the supplementary leverage ratio exemption is eliminated, I could use these deposits to purchase U.S. Treasury bonds and earn a stable return from them.

Bonnie: I heard an opinion from the head of a trading platform. He believes that other countries don't need to try so hard anymore because the U.S. already has an advantage in the competition of cryptocurrency and Bitcoin. After all, the underlying asset used when purchasing Bitcoin is USDT, which is pegged to the dollar.

Arthur Hayes: I disagree with that view. In fact, one of the world's largest cryptocurrency revenue markets is Korean traders. Therefore, I don't think the U.S. completely dominates this field; it is just one of many participants.

Open Interest in Futures Contracts

David: Recently, Bitcoin futures' open interest hit an all-time high. I checked my notes, and on May 22nd, the total open interest reached $89.8 billion, increasing by $15 billion in just five days, reflecting an unprecedented level of leverage in the market. How do you view this phenomenon?

Arthur Hayes: This actually just indicates that the market's interest in this field is constantly increasing, right? Obviously, the Bitcoin price has reached a new all-time high, and at the same time, more leverage positions have been built up, with the market generally expecting the price to quickly break through $110,000, or even higher. So I think this is a manifestation of optimistic sentiment.

David: Based on your past experience at BitMEX, what kind of market reaction usually occurs when there is a significant increase in open interest for futures contracts?

Arthur Hayes: I believe one key point to watch is the extension of the "basis." Simply put, it is the premium level between the Bitcoin futures price and the spot price. As of now, there hasn't been an extremely extreme situation, such as a premium of over 10%.

David: In BitMEX trading, do you think there are specific indicators that can be used to predict sharp market fluctuations? Are these indicators consistent?

Arthur Hayes: To be honest, I have not found any clear indicators to predict this situation. And frankly, I have not delved deeply into these data. So, currently, there are no conclusions to share.

Decentralized Exchange Hunted Down (Hyperliquid)

Bonnie: A recent event related to the JellyJelly meme coin raised a controversy about whether Hyperliquid is truly decentralized. If a centralized exchange can intervene or influence you with $10 million, is using a decentralized exchange like Hyperliquid really secure?

Arthur Hayes: Clearly, Hyperliquid may not be as decentralized as it claims to be. It seems that the Hyperliquid management team chose to prioritize protecting the purchasing power of their HLP token rather than fully adhering to the market's liquidation rules for the Jelly coin. From this perspective, yes, it is not entirely decentralized. However, on the other hand, this also indicates that they highly value HLP as it is the foundation of many market operations. For me, this actually gives me more confidence when trading on Hyperliquid. After all, most traders do not really care if the platform is fully decentralized; they are more concerned about liquidity and a rich variety of trading products. If Hyperliquid can provide these services in a relatively decentralized manner, that is sufficient, and we can trade on it with confidence.

The Intense Competition Between Trading Platforms and Banks

Bonnie: Many centralized trading platforms are expanding into the payment sector, as it seems to be their obvious next step. What is your view on the future direction of trading platforms in the next 10 years?

Arthur Hayes: I believe the market has now reached a state of full competition. There is not much innovation in the products of various trading platforms, and fees are also generally the same. Therefore, the core of the competition lies in marketing, especially in the United States. Now, all banks have started to offer similar brokerage services, making it more difficult for centralized trading platforms to survive. If banks like JP Morgan prohibit customers from buying Bitcoin, then platforms like Coinbase and Kraken will find it hard to maintain their profit margins.

David: Speaking of Coinbase, in recent weeks, some large trading platforms have completed their initial public offerings (IPOs), further accelerating the mainstreaming trend of cryptocurrency in the S&P 500 index. Do you think that people who are now investing in the S&P 500 need to realize that they are indirectly exposed to Bitcoin through these index funds?

Arthur Hayes: I don't think there is anything noteworthy about this. Many investors simply buy index funds, holding ETFs (Exchange-Traded Funds), and ETFs 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 exchanges become more mainstream, do you think they will attract deposits from retail users and traditional financial institutions like JP Morgan and Bank of America?

Arthur Hayes: I don't think they will because the distribution network of these banks is stronger than that of cryptocurrency companies.

David: So, in the foreseeable future, will there not be direct competition between the two?

Arthur Hayes: Actually, there is still direct competition, right? If JP Morgan allows users to buy Bitcoin, and Coinbase also offers a similar service, then in the end, users are buying the same Bitcoin. Thus, the core of the competition comes down to transaction fees. If JP Morgan can offer fee-less transactions because they can make profits through other banking services, while Coinbase still relies on its high-margin brokerage business, how will Coinbase respond?

David: If you were to create another BitMEX today, how would you prepare yourself to handle the crypto market's traffic?

Arthur Hayes: I would focus on attracting more 'Degens.' I wouldn't try to compete in the Bitcoin trading space as it would be a losing proposition. I would focus on meme coins and new project launch platforms. I believe creating more revenue through optimizing the new token issuance process rather than competing in the Bitcoin-to-USD trading market, as it is a low-margin, high-competition space.

Squid Game in the Eastern World

Bonnie: You've spent a long time in Asia, and I'm curious, in terms of money and investments, what have you learned from Asia that is fundamentally different from the US?

Arthur Hayes: I think Asians generally have a lower level of trust in the government, so they tend to be more cautious and skeptical when it comes to investment and wealth management. Their savings habits are also significantly different, with gold holding importance in Asian households and real estate investment being very common. This mindset difference shapes their unique investment approach.

Bonnie: So, do you think their investment style leans more towards risky or conservative? Why is cryptocurrency trading volume in South Korea so high?

Arthur Hayes: This is influenced by several factors. First, South Korea has a very high internet penetration rate, making it easy for people to access online trading platforms. Secondly, South Korea has a well-developed gaming culture, which makes it easier for young people to accept the concept of digital assets and virtual economies. Additionally, Korean society is relatively homogeneous, and competition is intense. Although Koreans are generally highly educated, high-paying jobs are relatively limited, making it challenging for many to achieve financial freedom through traditional careers. Therefore, many opt to trade stocks or cryptocurrencies to seek opportunities. This strong sense of competitiveness has driven the growth in trading volume.

The New Generation's Investment Outlook

Bonnie: The older generation holds a significant amount of wealth and hopes to fund their retirement by selling assets to the younger generation. However, the issue is that the younger generation is not keen on purchasing and accumulating these assets but rather prefers to pay for various experiences. How do you think this phenomenon will evolve?

Arthur Hayes: I think it will be very interesting to see the future developments in regulation regarding cryptocurrency and other digital assets. The current situation is that the Baby Boomer generation (those born between 1946 and 1964) holds a significant amount of stocks, real estate, and other assets. But the question is, will there really be buyers for these assets? Perhaps some younger people will be interested in large houses in the suburbs or apartments in the city, but overall, I'm not sure. So if the older generation needs to sell these assets to fund their retirement, and the younger generation is unwilling to take over, this will become a big problem. Worse still, if asset prices fall, the older generation's wealth will shrink, and they may not be able to afford retirement. At that point, the government may choose to fill the pension gap by increasing taxes, shifting the burden to the younger generation. But will the younger generation accept such an arrangement? That's still unknown.

Bonnie: So what do you think could happen?

Arthur Hayes: I believe there could be many conflicts between generations. While I can't predict the final outcome, I think the government is likely to choose the route of printing a large amount of money to address this issue. After all, for the government, this is the simplest and most direct solution.

Arthur's Fund Allocation

David: What are the current priorities in Maelstrom's asset allocation?

Arthur Hayes: In our portfolio, the majority of funds are invested in Bitcoin, while we also have a significant allocation in Ethereum. Additionally, we have participated in some project-related investments, including serving as advisors and making direct investments. For some projects with lower liquidity but promising prospects, such as Ethereum and Pendle, they are currently our key holdings.

David: How often do you adjust the Bitcoin allocation?

Arthur Hayes: Our overall trading frequency is not high. There may only be one to two major buys or sells per year because we don't want to trade too frequently. Our goal is to outperform Bitcoin's returns. If we identify a new project and its performance can surpass the capital gains from selling Bitcoin for investment, we will use those profits to buy more Bitcoin.

David: We've talked to some extreme Bitcoin supporters before, and they believe the way to outperform Bitcoin is to buy more Bitcoin. What's your take?

Arthur Hayes: I don't fully agree with this view because it also depends on the time frame. For example, a token going from $7 to $300. If you invest at $7 and sell at $300, then during this time frame, your returns have clearly outperformed Bitcoin's performance.

David: One last question, what are Maelstrom's upcoming plans? Are there any new expansions or projects?

Arthur Hayes: We are launching an acquisition business. Specifically, we plan to raise investor funds to acquire some specific cryptocurrency companies. The management structure of these companies may be reorganized, and we will focus on increasing new revenue streams. In the future, we also plan to list in the United States through a SPAC (Special Purpose Acquisition Company). Currently, we have identified a target company, are preparing for fundraising, and hope to significantly enhance the company's profitability through this plan.

David: What kind of businesses and operations are you interested in?

Arthur Hayes: We mainly focus on businesses with very stable cash flow and strong profitability. The company we are currently interested in has good profitability and a healthy cash flow, and we plan to complete the acquisition at a reasonable price.

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