Arthur Hayes on the resilience of Bitcoin and future predictions for the collapse of the Western banking system

In early 2022, VanEck’s prediction of a Bitcoin price drop to $10K-$12K by Q1 2023 shocked the entire crypto community. Matthew Sigel, VanEck’s head of digital asset research, cited a wave of miner bankruptcies as the main catalyst for this potential price decline.

Fast forward to 2023, and while some miners have gone bankrupt, others are currently busy with litigation. Further compounding the industry’s woes, pro-mining Texas recently passed legislation limiting the benefits available to the crypto mining industry.

Despite these setbacks, Bitcoin has performed exceptionally well in 2023, a fact that stands in stark contrast to VanEck’s earlier prediction. The world’s largest cryptocurrency is up 80% year to date, and is currently hovering around $30,000. This dramatic increase in value has confused many experts who had predicted a continuation of the crypto winter that gripped the market in early 2022.

Some have attributed Bitcoin’s resilience to its increasing mainstream adoption, which has increased its legitimacy as a viable investment option. Others point to the emergence of new use cases, such as decentralized finance (DeFi), which have captured the imagination of investors and developers alike.

Regardless of the reasons behind Bitcoin’s resurgence, it is clear that VanEck’s earlier prediction did not take into account the resilience and adaptability of the cryptocurrency ecosystem. While there may be challenges ahead, it is becoming increasingly apparent that Bitcoin is here to stay and that its value may continue to surprise even the most seasoned investors.

Arthur Hayes comments on the “balkanization of finance”

Arthur Hayes, co-founder and former CEO of BitMEX, attributes Bitcoin’s current success to the collapse of the Western banking system. In a recent interview, he stated that the world is recognizing that the entire Western banking system is bankrupt, and this realization is increasing the value of Bitcoin.

He argues that Bitcoin’s correlation to traditional assets is breaking down as it serves as an asset outside of the traditional fiat banking system. For example, the S&P 500 has only gained 7% year to date, while Bitcoin is up more than 80%.

Hayes has adjusted its investment strategy accordingly. Look for assets outside of the banking system, such as Bitcoin, gold, property, and possibly some RMB assets. He predicts that the next decade will see the balkanization of currencies, with the dollar accounting for 40-50% of trade.

Hayes also suggests that people will become more like FX speculators in the future as they use different currencies in different places.

Despite these predictions, the market may not see Bitcoin reach $1 million any time soon, according to Hayes. While he is a vocal supporter of Balaji Srinivasan, who bet Bitcoin would hit $1 million by June 17 due to hyperinflation and a failing banking system, Hayes believes Bitcoin is unlikely to hit $70,000 this year. . He predicts that by 2024, the market will know to be in Bitcoin, gold, ether, or other assets rather than stocks and government bonds.

Bitcoin has proven to be a successful asset in 2023, despite VanEck’s initial prediction. Hayes suggests that Bitcoin’s value will continue to rise as the Western banking system continues to collapse. However, he warns that Bitcoin may not reach $1 million any time soon.

BitMEX Executives Launch Maelstrom Family Office for Crypto Infrastructure Investment

Arthur Hayes and Akshat Vaidya, who used to hold executive positions at BitMEX, set up a family office called Maelstrom. This office is dedicated to investing in infrastructure companies that operate in the crypto industry. The rationale behind the infrastructure focus is that the current market cycle lacks sufficient infrastructure to support consumer scale.

Maelstrom has access to a pool of crypto and fiat money owned by Hayes, allowing the firm to take a patient approach to identifying high-quality projects without feeling pressured to deploy capital to earn management fees.

According to Hayes and Vaidya, the projects they invest in are expected to reach a tipping point around 2024, when the market begins to look at whether they have delivered on their promises, developed their products, won customers, and tested the functionality of their technology. This will be a critical juncture where investors will be able to distinguish the authentic and valuable companies from the copycats.

The two executives acknowledge that investing in infrastructure projects at this stage of the market cycle has the advantage of not being targeted by regulators to the same extent as other types of projects.

All but one of Maelstrom’s portfolio companies have been domiciled outside of the US, and even when a project involves US founders, it is domiciled in a friendly jurisdiction such as Switzerland.

Maelstrom’s investment strategy focuses on identifying companies with strong technology foundations that target a large market and with simple, easy-to-understand business models. In today’s market, it’s important to not only make money, but also to have done the legwork during the bear market to identify which companies are truly valuable and which are just knockoffs.

While the focus is on quality projects, Hayes and Vaidya acknowledge that investing in a whole piece of dung may be necessary to reap crypto-level returns.

Maelstrom’s quality-focused and patient approach to investing in crypto infrastructure companies appears to be a prudent strategy in a market that is still in its early stages of development. With the right investments, Maelstrom can outperform Bitcoin and Ethereum in the long run.

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