Arthur Hayes: Making Money in Cryptocurrency despite a 25% Success Rate
BitMEX founder Arthur Hayes recently reflected on his past year of market predictions. Despite only getting it right 2 out of 8 times, with a mere 25% accuracy rate, he still managed to profit. How did Hayes achieve this?
Hayes’ Investment Strategy
Hayes believes that as an investor, trader, and speculator, the goal is to acquire Bitcoin at the lowest possible cost. This can be achieved by shifting excess cheap energy into Bitcoin mining, borrowing fiat currency at low rates to purchase Bitcoin (similar to MicroStrategy’s Michael Saylor), or using some fiat savings to buy Bitcoin. The key point is: avoid leveraging to buy Bitcoin for long-term holding. Profiting from short-term price movements is challenging. With a win rate of only 25%, if he had gone all in on each prediction, Maelstrom (his family office fund) would have gone bankrupt long ago!
Global Economic Analysis
Hayes also analyzed the situations in major world economies, explaining why he continues to be bullish on Bitcoin. With the Federal Reserve initiating a rate cut cycle, the banking system will release more US dollars. Regardless of the outcome of the US presidential election, governments will continue to borrow as much as possible to gain public support. European bureaucrats are avoiding cheap and abundant Russian energy, dismantling their energy production capacity in the name of meaningless slogans like “climate change,” “global warming,” and “ESG.” The European Central Bank will counter economic sluggishness by lowering the Euro interest rates. Governments worldwide will start pressuring banks to lend more to local businesses so they can create jobs and rebuild crumbling infrastructure.
Global Monetary Policies
Chinese President Xi Jinping’s main concern with accelerated bank lending is the pressure of RMB depreciation against the dollar. If the Fed prints money, so can the People’s Bank of China (PBOC). This week, the PBOC announced a series of interest rate cuts for the entire Chinese monetary system, just the beginning of radical economic stimulus.
Investing in Cryptocurrency
Hayes advocates for a careful observation of the fiat value of your investment portfolio if fully invested in cryptocurrencies. If you have spare fiat, deploy it into cryptocurrencies. Hayes’ rhetoric resembles traditional value investors, like MicroStrategy’s Michael Saylor, a Bitcoin believer and Hodler. He also resembles Warren Buffett, insisting on holding companies like Coca-Cola that continuously create value and using a snowball approach to steadily grow investments.
Hayes also holds many shitcoins, recently tweeting about buying the Mother meme coin on X, showing a level of FOMO that is hard to associate with a value investor. However, his advice is crucial: for long-term holdings, avoid leveraging and use “idle funds” for purchases.
Investing in assets for the long term, without leverage and at a low cost, is imperative according to Hayes. Whether cryptocurrencies like Bitcoin are viable value investment options is left for readers to decide.
Why Arthur Hayes Remains Bullish on Bitcoin
Is Arthur Hayes a Value Investor?
Implications of Global Monetary Policies
Further Reading
