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Why Arthur Hayes says now is the time to launch new crypto tokens – DL News
- Arthur Hayes tells portfolio companies to launch their tokens.
- The call comes after several interest rate cuts by central banks this week.
After declaring a pause in the cryptocurrency market during April and May, BitMEX co-founder Arthur Hayes says now is the time for new crypto projects to launch their tokens.
In his last wise regarding how economic conditions will affect the cryptocurrency market, Hayes recounted how several of his venture capital firm’s portfolio projects have recently asked him if they should launch tokens.
His answer? A resounding yes.
“The trend is clear,” Hayes said, pointing to interest rate cuts by the Bank of Canada and the European Central Bank. “Central banks on the sidelines are starting easing cycles.”
Interest rate cuts make borrowing cheaper, which tends to push investors into riskier assets.
When optimistic investors drive cryptocurrency prices higher, projects rush to launch tokens to take advantage of the favorable market conditions.
Hayes’ family office runs a cryptocurrency firm called Maelstrom Capital. The company lists a portfolio of more than 20 crypto startups.
While some of these companies have already launched tokens, others, like Elixir, have not, despite a month of activity. points campaign – often a sign that a crypto project is planning throw a token.
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Investors are getting tired of tokens
There are reasons why projects may still want to hold off on launching their tokens.
DeFi users have it rejected against projects that employ what many call predatory “low float high FDV” token structures that benefit early venture investors.
Fully diluted valuation – or FDV – refers to the total supply value of a token, including those locked or yet to be distributed, and not just those in circulation.
As a result, many new tokens crashed upon launch, signaling a lack of investor demand.
A macroeconomic shift
However, investor fatigue could be quickly forgotten by a rapid change in economic conditions.
Hayes pointed to recent rate cuts by the Bank of Canada and the European Central Bank as an indication that macroeconomic conditions are changing faster than expected.
“I thought the fireworks would start in August,” he said.
Hayes, however, stopped short of predicting an immediate rate cut by the Federal Reserve.
However, the likelihood of rate cuts in the US has increased.
Neil Wilson, chief analyst at Markets.comsaid weaker-than-expected U.S. economic data raises the odds of a rate cut in September to 70%.
The reaction was swift.
On June 4, US spot Bitcoin Exchange Traded Funds recorded the greater one day investment from March 12th.
The battle for the yen
Hayes previously outlined because he believes that a weakening of the Japanese yen will cause cryptocurrency prices to rise.
To help support the value of the yen, the Fed could create new dollars and exchange them for yen with the Bank of Japan. This would allow the Japanese Ministry of Finance to purchase yen on foreign exchange markets, increasing its value.
Hayes argues that so-called money printing is good for risky assets, including cryptocurrencies.
Hayes pointed to another way to narrow the gap between the value of the yen and that of other currencies.
Interest rates in Japan are much lower than those in the United States and Europe. This devalues the yen as traders sell it for other currencies with higher interest rates.
To combat the yen sell-off, central banks with high interest rates could lower them to make this trade less attractive.
However, lowering interest rates also risks fueling another wave of inflation.
Hayes’ bets
Hayes said he will disclose his strategy in due course.
“It’s time to use it on bullshit coins again,” he wrote. “Of course, I will tell readers what they are after they purchase them.”
“But suffice it to say, the cryptocurrency bull is awakening and about to get under the skin of profligate central bankers.”
Tim Craig is a DeFi correspondent at DL News. Do you have advice? Send him an email at tim@dlnews.com.