Source: Kyle Crypto Hunt

Translation: Azuma, Odaily Planet Daily

Editor's Note: The market prediction expert, industry legend, and BitMEX co-founder Arthur Hayes is back to forecast market trends. In today's updated Kyle Crypto Hunt podcast, Arthur Hayes shares his insights on macro liquidity changes, future market directions, personal positions, and operations.

Below is the full content of the podcast discussion with Arthur Hayes, translated by Odaily Planet Daily, with some content omitted for smoother reading.

Opening Remarks

Everyone is waiting for the Federal Reserve to say that "magic phrase," as if once it is uttered, the positions in everyone's accounts will take off — "Quantitative Easing (QE) is here." But if you are still waiting for the Fed to announce it directly like before, you might as well be watching a foreign film without subtitles.

Today's guest is Arthur Hayes. He is the co-founder of the cryptocurrency exchange BitMEX. Before entering the cryptocurrency space, he worked in trading at Citigroup and Deutsche Bank, specializing in macro analysis. You'd better watch this episode with a magnifying glass and take notes, because he says, "The headline you are waiting for will not appear."

Part 1: The Latest Developments — Bank of Japan Raises Interest Rates

Host (Kyle Chasse): Arthur, it's great to have you on the show. Before we officially start, the latest macro event is the Bank of Japan's (BOJ) decision. By the time the audience sees this episode, the decision should have been announced (Odaily Note: It has been confirmed to raise rates by 25 basis points). Do you think the rate hike will really happen? If it does, what does it mean for the market?

Arthur Hayes: Yes, after Ueda Kazuo (Odaily Note: Governor of the Bank of Japan) spoke a few weeks ago, he basically made it clear that a rate hike is "on the table," and the market quickly raised the probability of a rate hike.

From what I've learned from some people more familiar with the BOJ's internal discussions, the dollar-yen exchange rate between 155 and 160 is the BOJ's "red line," so they will take necessary measures — either raise rates or allow some form of foreign exchange intervention — to prevent the yen from further depreciating and breaking through 160.

I think this rate hike will probably just adjust from 0.5% to 0.25% (Odaily Note: The final result is completely consistent with Arthur's prediction). In the context of an official inflation rate of about 3%, this has almost no substantive significance on a macro level. It may tighten the market slightly in the short term, but it won't change the essential trend.

Part 2: The World Focus — The Successor to the Federal Reserve

Host (Kyle Chasse): Right now, the most concerning question is who will succeed the Federal Reserve Chair. They all tend to favor rate cuts, but the paths are completely different. Do you think if Warsh (Kevin Warsh) takes over, it would pose a threat to the environment for risk assets?

Arthur Hayes: I always say one thing — the U.S. president will ultimately get the monetary policy he wants.

If you look back at the history since the Federal Reserve was established in 1913, the power struggle between the president and the Fed chair has never been new. This struggle has always been public, intense, and even ugly; Lyndon Johnson once physically confronted then-Fed Chair William Martin on his Texas farm to force him to cut rates… so what Trump’s harsh attitude towards Powell seems to be is really nothing.

The key is not what that person "believed" before becoming chair, but once he sits in that position, he will understand — he is there to work for Trump. Trump wants lower rates, more money supply, and a hotter market, while also seriously denying that these are related to inflation; otherwise, he and the Republicans will be out in the next election.

So no matter who becomes chair, the outcome will be the same. They will deploy any necessary tools to get the job done based on the situation. Who ultimately sits in that position doesn't matter; I don't care.

Part 3: The Lifeblood of the Stock Market — Can the AI Bubble Continue?

Host (Kyle Chasse): What do you think about the tug-of-war between inflation and liquidity? If we start massive "money printing" as Hassett (Kevin Hassett) expects, the liquidity environment will obviously be very bullish, but usually, the more you print, the higher the inflation, and ordinary retail investors will still be under pressure.

Arthur Hayes: To me, the "rules of the game" for the Fed and the Treasury are actually very simple — the U.S. economy is essentially a highly financialized economy, and the stock market is the U.S. economy itself.

So ultimately, the authorities must ensure that the stock market rises at all costs, which also means the AI wave must continue. I know some people are starting to question the AI bubble, saying a correction has already occurred, but I think they are completely missing the point. If you are a stock investor, you should be long and accept some volatility; it is very rash to short the Nasdaq or companies like Nvidia right now because this bubble is far from bursting, and the authorities need it to continue.

Trump has bet the entire U.S. economy on the success of AI. And for AI to succeed, the only way is through more debt-driven growth, lower capital costs, and greater money supply. He will keep doing this until he can’t anymore.

The problem is that this will lead to inflation. So how can politicians seriously tell voters, "These policies will not lead to inflation"? The answer is to rename it. Everyone knows that quantitative easing (QE) = printing money = inflation. So the term QE will no longer be used; it will never appear again because ordinary people on the street know that it means inflation, and people hate inflation, which will lead them to support the Democrats in the next election.

Part 4: The New Face of QE

Host (Kyle Chasse): You just mentioned that policies similar to quantitative easing are just being renamed. Looking back, you will find that it is still easing, just that it looks different at the time. So what will this time be called?

Arthur Hayes: This new name is "Reserve Management Purchases" (RMP).

When this term first appeared, I spent a lot of money consulting researchers in the field of macroeconomics. I asked them, "Is this considered QE?" Most technical monetary market experts said: No, strictly speaking, it is not QE. I asked some bond trader friends, and they also said it is not QE, it is something else. But when you ask more cynical macro analysts like me, we would say:

Technically no, but essentially yes — it will have the same effect.

Currently, the market's attitude (represented by Bitcoin, as it is most sensitive to dollar liquidity) is that this is not QE, but I believe the market has not really understood what this is. Looking back at 2008-2009, when Bernanke introduced the U.S. version of QE, the market initially did not believe it at all. The S&P index continued to decline until it truly bottomed in March 2009.

At that time, Bernanke kept emphasizing that this was just "temporary balance sheet expansion," and it would eventually be unwound. But then QE came in waves until it really ended in 2021, and the market peaked and significantly corrected at that time. So the key is that the market initially did not believe that QE was printing money until they later realized: "Oh, this is printing money, quick, get in!"

Today's RMP is undergoing the same process. The Fed is buying short-term Treasury bills (T-bills) instead of MBS or 10-year Treasuries. From a duration perspective, T-bills indeed have a smaller impact, and if you assume that the banking system is the main channel affected by this program, then RMP is indeed not QE, but that is not the case. The Fed is doing this to induce money market funds to provide more loans in the repo markets, which can directly fund the U.S. Treasury. So this is a way for the Fed to directly use money market funds and the repo market as a medium to finance the U.S. Treasury at the short end of the Treasury curve.

As time goes on, people will see that the deficit has not decreased, the issuance of short-term Treasury bills continues to rise, and the usage of the repo market is growing. By then, asset prices will bottom out and rebound, and the market will realize: "This is actually QE."

Part 5: When Will the Market Bottom?

Host (Kyle Chasse): What do you think the timeline is for the market to realize this? You mentioned that asset prices might bottom out during this period; when specifically?

Arthur Hayes: I think starting in January next year, (asset) price performance will improve significantly; but around March, the market will start to worry about whether this "temporary project" will end, leading to a round of turbulence; then they will confirm that RMP will continue, and the market will restart.

Part 6: Arthur Hayes' Personal Operations

Host (Kyle Chasse): How would you operate now? How are you personally positioned? Are you leaning towards hedging or taking risks?

Arthur Hayes: We have probably deployed 90% of our capital, with a little cash left to handle volatility. Maelstrom (Odaily Note: Arthur's family investment office) does not use leverage, so we are not afraid of Bitcoin briefly dropping below 80,000.

What we are currently more concerned about is what the next dominant altcoin narrative will be. Setting Bitcoin aside, our most successful altcoin position this round is Ethena (ENA), which we entered very early as we are the financing advisors for that project.

I believe the next round will be in the direction of privacy and ZK-related projects. We currently have a significant exposure to Zcash (ZEC), but I think there will be some related projects in this field that will truly explode and may become the best-performing altcoins in the next two to three years. I think 2026 will be the time to find that project; we don’t know what it is yet, but our job as investors is to look for opportunities.

Part 7: The Value and Risks of Privacy Narratives

Host (Kyle Chasse): To be honest, exposing all transactions on-chain for everyone to see is really annoying, right?

Arthur Hayes: What people don’t understand is that they are only seeing what I want them to see. If I want you to see it, you can see it; if I don’t want you to see it, you will never see it.

So when you see those "wallet tracking tools" on X or other social platforms, please take everything you see with a grain of skepticism. That may not necessarily be what is really happening.

But in my view, the core value of the privacy narrative for Zcash and other ZK projects lies in — if I really need to ensure that no government, no opposing companies, and no one is monitoring what I am doing, do I truly have the tools to do that now? Clearly, there is a fear underlying this, and what you need to do is leverage that fear. Even if three years from now, it turns out that the hottest "altcoin" of 2026 is complete garbage, it doesn't matter; you can still make a lot of money before that.

Host (Kyle Chasse): Do you think it's possible — I know it's not possible to completely shut it down or ban it outright — but if the government really tries to say "using this is illegal," that would definitely scare a lot of people away, right?

Arthur Hayes: I think in this information age, the government has become much smarter. If you tell people "you can't do something," but you don't have the means to truly enforce that ban, then not only will people continue to do it, but they will want to do it even more.

Therefore, the government no longer outright bans it but chooses to restrict intermediary services, such as limiting exchanges from listing privacy coins. When I was truly "brainwashed" by Zcash, I first picked up my phone to buy a little, and then I contacted eight brokers I knew to get quotes for a multi-million dollar trade, but only two were willing to quote, while the other six were prohibited by regulators from trading privacy coins.

Now, most exchanges are simply not allowed to trade Zcash or other privacy coins. This is how the government prevents you from holding it. They don't directly ban it; they just make it extremely difficult for you to obtain it.

Part 8: What If the Predictions Go Wrong?

Host (Kyle Chasse): Based on your previous explanation, your overall judgment for 2026 is bullish. So are there any key indicators, charts, or events that could overturn this judgment and make you very bearish in 2026-2027?

Arthur Hayes: Some might say that a pullback of Bitcoin from 125,000 to 80,000 is just the beginning, and it could drop even further, using that to argue against me: "Arthur, you've been saying money will be printed, but Bitcoin is still falling; clearly, the market doesn't believe what you're saying."

To that, my response is: "You're right."

I'm talking about a future state. I'm saying the market is currently digesting a new term for "printing money," at least in the U.S. But perceptions can change, and that is the risk I take with this judgment; the market will validate the answer. If I'm wrong, then I'm wrong, but I have put real money on this judgment. We will witness the outcome together.

Part 9: Will There Be Another Altcoin Season?

Host (Kyle Chasse): Will we see another altcoin season in the next year or two?

Arthur Hayes: I think people have a serious selective memory about "altcoin seasons," filled with many "could have," "should have," and "if only" assumptions.

You say you want an altcoin season? Then think back to 2016-2017, when basically some guy posted a ridiculous PDF online and gave an address for you to send money. Did you send it? Most people didn't, but many did, and they made a ton of money. Then think about the NFT craze of 2020-2021, where everyone was trading some hideously ugly apes and penguins on the blockchain, but you were taught from a young age that masters like Rembrandt and Picasso are the pinnacle of art. Did you go crazy trading NFTs then? Many people did not.

So don't talk to me about altcoin seasons. You didn't dare take risks in 2017, you didn't dare in 2020, and you won't dare in the Hyperliquid of 2024-2025 either. Altcoin seasons have always been there; you just lack the courage to participate. What you want is that familiar altcoin season because only then do you feel you know what to do, but the cycle will refresh, and what rises will always be new things. Either you adjust your cognitive framework, or you will forever live in the past and complain that altcoin seasons don't exist, but that's just because you didn't buy into the rising ones.

Part 10: The Big Opportunities in Arthur Hayes' Eyes

Host (Kyle Chasse): Is there anything you're really excited about that you haven't publicly discussed yet? Not the well-known blue chips, but something higher on the risk curve.

Arthur Hayes: I might write an article about this at the New Year. Maelstrom has a bunch of investment professionals, and I also have a directional trading account where I can trade whatever I want.

I reviewed my trades this year; overall, it was profitable, but if you look at the statistics, you'll find that only about one-fifth were profitable, and I lost money on most trades. I threw a lot of money at some of the crappiest shitcoins or meme coins, but I shouldn't have touched those; I just thought they were "fun," but that's not my style. I shouldn't have been messing around with that garbage.

The coins I made the most money on were Hyperliquid (HYPE) and Ethena (ENA); I just needed to catch those big fluctuations, and fortunately, we have ample capital to place heavy bets on those coins.

One trade I like is ENA — you can check the on-chain records that I allow you to see. I believe ENA is in the early stages of a massive rise because this is an interest rate game. As the Fed lowers short-term rates, if the narrative about RMP is correct, then Bitcoin will rise, and people will want to leverage it; they will be willing to pay a higher basis, and Ethena is the tool to capture that on-chain. Currently, we see USDe undergoing large-scale redemptions, but I believe this trend will reverse, just like in September 2024, and we will see ENA experience a very rapid rise. Among the blue-chip coins we hold, this might be one of my strongest convictions; it aligns with my overall macro monetary argument.

Part 11: Quickfire Questions

Host (Kyle Chasse): Now we move into the quickfire question segment. By the end of 2026, will Bitcoin be higher, lower, or flat? What price range?

Arthur Hayes: Higher. I previously said 250,000 by 2025, which clearly is unlikely to happen now. I will repeat the same target: 250,000 by 2026.

Host (Kyle Chasse): Name a trade that everyone loves but you think is a trap.

Arthur Hayes: Shorting Nvidia.

Host (Kyle Chasse): What is the most dangerous macro narrative in the cryptocurrency space right now?

Arthur Hayes: Central banks tightening monetary policy.

Host (Kyle Chasse): What is the best signal for the return of liquidity?

Arthur Hayes: This requires digging deep into central bank balance sheets and the banking system. Signals are never very straightforward because they want to deceive you.

Host (Kyle Chasse): What is your positioning on ETH?

Arthur Hayes: The king of settlement.

Host (Kyle Chasse): What is the most underestimated risk in the market?

Arthur Hayes: Leverage.

Host (Kyle Chasse): If you could, what would you want to ban from the collective sentiment in the crypto market?

Arthur Hayes: Stop thinking that market makers are manipulating prices against you every day.

Host (Kyle Chasse): If someone wants to see those wallets you "don't want them to see," what should they do?

Arthur Hayes: Use your imagination, my friend.

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