BitMEX Co-Founder Explains Where He Is Putting His Money During This Crypto Winter

On Friday, BitMEX Co-Founder and Former CEO Arthur Hayes stated that he is “earning a yield” while waiting for “the crypto bull market to return” (9 December 2022).

“I’m not sure if $15,900 was the bottom of this cycle,” Hayes wrote yesterday. I am confident that credit contraction has put an end to forced selling. I’m not sure when or if the US Federal Reserve will print more money. The tightening monetary policies of the Fed will render the US Treasury market dysfunctional in 2023. I expect the Fed to activate the printer bank, and then Bitcoin and other risk assets will skyrocket.

While he waits for “the crypto bull market to return,” Hayes desires a much higher yield (which he is sure will happen since “everything is cyclical”).

He then spent several months discussing his investment strategy:

My ideal cryptocurrency has a beta similar to Bitcoin and Ether. Cryptocurrency reserves According to crypto beta, if they rise, so will my asset. This asset must generate revenue for token holders. This yield must be significantly higher than 5%. I can make money by purchasing 6- or 12-month Treasury bills. Superpowers like GMX and LOOKS are in my portfolio. In this essay, I will not explain why I will sell my T-bills and buy these during the hopefully sideways bear market. Token Terminal, on the other hand, can assist you in locating the right asset to participate in the upside and earn income while you wait for the bull market to return. Then you must determine which protocols have appealing tokenomics. 

A token holder may earn a lot of money, but getting their share is difficult. Some protocols distribute the majority of revenue directly to token holders. Some of these projects benefit from the two downward waves of the 2022 crypto credit crunch, which hit DeFi hard. Investors rejected both good and bad projects as they sought fiat to repay loans. As a result, many of these projects have truly bombed in terms of price-to-fee ratio.

“If I can earn 5% in treasuries, I should be able to earn four times that, or 20%, when purchasing one of these tokens.” With a 20% annual yield, I should only invest in projects that have a P/F ratio of 5x or less. My hurdle rate is one-of-a-kind. I could buy Bitcoin or Ether, but neither provides a sufficient return. “If I’m not getting enough yield, I’m hoping for a huge fiat price appreciation when the market turns.” Investing at what you believe to be the bottom is unquestionably risky. But if there are low-cost protocols that provide the return profile of Bitcoin and Ether as well as yield from actual service usage, I’ll be overjoyed! You’re on your own, spreading Satoshi’s message to the TradFi devil’s harpies. But do not be afraid, brave and righteous warrior, for the faithful will receive the spoils of war.

The former BitMEX CEO explained why Ethereum ($ETH) will likely remain the leading smart contract platform in the next bull cycle on October 21, 2022.

Hayes made these remarks on Crypto Banter, according to the Daily Hodl.

“It would make sense to allocate to one or more of these things at the bottom because they’re going to go up quickly,” Hayes explained to Crypto Banter host Ran Neuner. Ethereum is now unrivaled. Transactions per second and other metrics do not tell the whole story. Developer ability… Ethereum has thousands of developers. Only a few hundred will be significant in the next blockchain. This ecosystem is built by developers. They are in charge of developing applications.

“Do they have anything to offer in the next cycle?” What will they offer in the next cycle? Many transactions are being processed if it is simply “Ethereum is slow.” Gas prices are extremely high. We’re faster because we did some fancy math on a piece of paper, and our testnet is fast. That is a success. “The second time is the charm.”

On September 22, 2022, Hayes discussed how he selects crypto market winners for the next bull cycle in an interview with Real Vision Founder and CEO Raoul Pal.

“I guess you use survivorship bias,” he said. Will a top 20 market cap asset survive the next cycle if it is down 95%? Can it last two years? How much did they raise? If so, buy it. It could fall to zero. 10x or 20x is preferable. If it went from 100 to one to ten, it’s ten times. I’m still not where I was, but I’m on the rebound.” So you know that when crypto recovers and the next cycle begins, everything that fell the most will rise the most due to the path dependency of how returns work.” So I guess this doesn’t change in the majority of these cases. The majority will fail, but you don’t care. It all comes down to numbers.