On September 8, 2026, Arthur Hayes, Chief Investment Officer of Maelstrom, gave an interview on The Rollup podcast, discussing the global macro environment and the outlook for the crypto market. He believes that Japan's gradual unwinding of large-scale yen carry trades, combined with rising risks in the French bond market, may force the Federal Reserve to accelerate the creation of dollar liquidity, and that the euro-yen exchange rate is an important leading indicator for observing this shift. Hayes also discussed the unit economics of the AI industry, possible government bailout measures and their impact on the fiat debasement trade, and introduced Maelstrom's current market allocation, explaining why Ethereum is its larger position for riding this round of liquidity-driven market action.

Editor's note: Arthur Hayes has long been known for his sharp views and willingness to make predictions, but his market forecasts often change, and he himself has repeatedly acknowledged that his predictions have a very high failure rate. Therefore, readers should not treat his specific price targets, timing, or trading actions as investment advice. Compared with the forecast results themselves, what is more noteworthy about Hayes's articles is his analytical framework and thought process regarding the relationships among global liquidity, monetary policy, the fiscal system, and the crypto market. Wu Blockchain reposts his articles mainly in the hope of providing readers with a reference perspective for observing the macro and crypto markets. The following is the original content:

Japanese capital repatriation may become a catalyst for a new round of crypto market gains

Host: Arthur, great to have you back. Welcome to the bull market. On-chain markets are heating up, major coins are rising, but people in institutions and the AI world still seem to be on the sidelines. I went to Jackson Hole last week for the Fed meeting. Kevin Warsh began his speech by talking about having done two hikes in Jackson Hole, one very difficult and one very easy; the market reacted very strongly this week. What state is the macro environment in right now? Scott Bessent and Warsh are both taking action. What do you think?

Arthur Hayes: First of all, Warsh doesn't matter. Whatever he says is irrelevant. He gave that speech about two weeks ago, but I think what really matters happened more recently. I wrote a whole article about it, and this is the theme I'm most focused on right now.

In modern global financial markets, Japan is usually associated with various important changes. Starting around mid-to-late July, Japanese Finance Minister Katayama Satsuki stated that domestic institutions need to reassess their asset allocation standards, reduce holdings of foreign assets, and increase investment in Japanese domestic assets. She was effectively referring to the Government Pension Investment Fund (GPIF). GPIF is Japan's largest pension fund and is a quasi-governmental institution. At the time, the USD/JPY exchange rate was around 160 to 163.

Everyone might agree with this direction, but the question is whether the government will take measures to make it actually happen. GPIF's last major asset allocation adjustment was after 2012, and individuals and corporations subsequently followed suit. At the time, Shinzo Abe pursued Abenomics, stimulating the economy through money printing, and hoped GPIF would increase its allocation to foreign securities and reduce its allocation to domestic securities. It took him two years to get GPIF to formally agree, including removing opponents and appointing supporters of this direction. Afterward, GPIF published an allocation framework increasing foreign assets and reducing domestic assets, and the market took off, with USD/JPY rising, the yen weakening, Japanese investors beginning to invest overseas, and others gradually following.

Therefore, I initially thought it might take two or three years before GPIF started selling U.S. Treasuries and buying Japanese government bonds, and that this was not something requiring immediate attention. But then the first yen intervention appeared: Bessent sold euros and bought yen, and proposed that the single-counterparty limit on the Federal Reserve's Foreign and International Monetary Authorities Repo Facility (FIMA Repo Facility) should be eliminated. He was effectively pressuring Warsh to fulfill his duties and remove this cap. This meant that institutions such as GPIF would not have to sell U.S. Treasuries, but could instead use U.S. Treasuries as collateral to obtain dollar loans from the Federal Reserve, then sell dollars and buy yen in the foreign exchange market, and finally bring the funds back to Japan.

This is only one piece of the puzzle, because it also requires Warsh to convene the relevant financial subcommittee and for the committee to agree to do so. Afterward, the U.S. Treasury also proposed increasing the scale of Treasury buybacks by $20 billion, but relative to a bond market of about $40 trillion, this is not much. Last week or earlier this week, Bessent also said that the Bank of Japan needs to raise interest rates at a faster pace. Similar things have been said before, and the key remains what actions he is prepared to take.

There is also the G20 meeting this week. I believe that some kind of agreement may have been reached on the sidelines during the meeting, and the Japanese side finally received the message. Bloomberg reported that GPIF held an unscheduled meeting in August. August is a holiday month in Japan, and convening an unscheduled meeting at this time is very unusual. We do not know what was discussed at the meeting, but previously the Japanese government asked it to increase its allocation to Japanese assets, and Bessent also asked Japan to increase its own assets and sell U.S. assets. After that, USD/JPY fell from 160 to 155 within one trading day, and EUR/JPY also fell by about 3 yen during the Asian trading session, which was a very large move.

I think an announcement may soon come: either the cap on the FIMA repo facility will be raised, or the GPIF has begun adjusting the allocation weights between domestic and foreign assets. The crypto market and other markets reacted to this overnight. At the same time, Waller said inflation does not seem that severe and the Fed perhaps should not raise rates. Putting these things together, the goal is to weaken the dollar and strengthen the yen. This has always been one of the top objectives of the Trump administration, which wants to reshape the global trade architecture.

To do this, the yen must appreciate. The yen may be the most undervalued currency in the world apart from the renminbi. It is difficult for the United States to take the same action against China, but it can influence Japan, because Japan depends on the United States for security guarantees. I think this is why the crypto market is rising. The market had been pricing in all kinds of information, and now a substantive change has finally occurred. Without any clear news, the dollar fell from 160 to 155 against the yen, which shows that something has changed.

Therefore, I think the move has already begun. Crypto assets and other assets rose overnight, while the S&P index was roughly flat or down, and tech stocks and AI trades did not rise noticeably either, which shows that this is a liquidity logic. In the coming days or weeks, more information may be disclosed proving that an agreement was indeed reached during the G20 and that corresponding arrangements will be introduced to push down the dollar and push up the yen by creating dollar liquidity.

Japan Inc. Is Reversing the World’s Largest Yen Carry Trade

Host: Pushing down the dollar means pushing up our assets. You did not discuss the yen carry trade in detail in your latest article. When many people think of Japan and the yen, they think of the carry trade or the basis trade. Is this related to the logic you just described? If so, what impact will it have?

Arthur Hayes: I call Japanese society “Japan Inc.,” and it runs the world’s largest yen carry trade. If you look at Japan’s consolidated balance sheet and include private-sector assets, you will find that Japan has in fact been printing yen and buying foreign assets.

As the yen depreciated and the assets Japan holds, such as U.S. tech stocks, rose, Japan as a whole performed very well. Some people focus only on a single indicator such as debt-to-GDP, but Japan should be viewed as a whole. Although Japan calls itself a capitalist society, it has strong communitarian and socialist characteristics, and capitalism is more of an external form. In the final analysis, there is a “Japan Inc.,” the yen carry trade is a nationwide trade, and Japan is also the largest participant in this trade.

Once GPIF is instructed to shift, "Japan Inc." will follow suit: selling foreign bonds and equities, selling foreign currency and buying yen, bringing capital back home to invest in Japanese government bonds, local companies, and real estate. This is the directive issued by the government. It will take time to get started, but once it begins, one should not stand against this trend.

The problem the US faces is that Japan has held these assets for the past 30 years, driving US market gains. When the entire US system depends on financial gains from rising stock markets and continuous debt issuance, how should this trade be exited? The US can only respond by printing money, taking over the trades Japan used to make.

Japan's past strategy was that even if the dollar-yen rate rose to 200, it didn't matter, as long as it could reflate the domestic economy and escape the problems left by the 1980s real estate bubble through inflation. The US is currently adopting a similar strategy: even if the dollar index falls to 50, it is acceptable as long as it can become an industrial powerhouse again and bring the debt-to-GDP ratio from about 100% back down to about 30%, as it did after the last time it adopted a similar strategy. The two are essentially the same trade. It takes a long time to take shape, but once it starts, it is very difficult to go against the trend.

US monetary policy has long ceased to be truly restrictive

Host: Warsh spoke at Jackson Hole about the disinflationary effects of AI and innovative technologies, and at the end of his speech expressed concerns about inflation. The changes you describe seem to be the beginning of a broader rotation. After the pandemic, US financial policy was extremely loose; the past four years have been a higher interest rate environment, quantitative tightening only ended about six months ago, and the Fed's balance sheet has since flattened and begun to rise again. Do you think US financial policy is moving from a restrictive environment into a looser, more supportive phase?

Arthur Hayes: The period when the US monetary environment was truly restrictive was only from December 2021 to October 2023. After that, Janet Yellen began issuing more short-term Treasuries and bonds, and drained $2.5 trillion from the reverse repo facility. For holders of crypto assets and other assets, the market has been back in an upward phase since then.

As you said, the AI trade is their "get out of jail free card." Over the past fifty or sixty years, the US has printed a lot of money. By normal mathematical logic, interest costs and debt size grow exponentially, and it is almost impossible to solve this through economic growth alone. But now a new thing called AI has appeared. The narrative is that as long as AI is developed and the AI competition with China is won, the debt problem will disappear and productivity will rise substantially.

This is why Warsh, Trump, Bessent, and everyone else are talking about AI. It's the only way they can explain to voters: don't worry about how much the government is spending, and don't worry that government spending as a share of GDP is higher than at any time outside of war or pandemic periods, because America has AI and will win the AI race. But these people may not even know what AI specifically means—they've simply bought into the narrative that Dario, Sam, and Elon are selling them.

AI will also be folded into the same trade. If AI is the only justification the government uses to explain how it will solve the deficit problem and why no one should worry about spending, then what will the government do once the major AI labs come under pressure because the unit economics don't work? It will bail them out, and the bailout will come in the form of pouring in more money.

Therefore, the Japan-related trade architecture and Europe's problems will both push the US to create more money; AI gives the government a face-saving reason. The government has already wasted trillions of dollars on these hallucinating chatbots, and that will also become the reason it keeps flooding the market with massive amounts of money. Combined, these two factors will help crypto assets hit new highs.

AI capital misallocation will ultimately benefit Bitcoin and gold

Host: Over the past 6 to 18 months, Bitcoin's fiat debasement trade logic seems to have broken down—Bitcoin has underperformed, while gold has risen, and tech stocks have significantly outperformed the market, with AI capex, storage, and other sectors showing strong performance. Will the shift you're describing cause gold, Bitcoin, and other fiat debasement trade assets to benefit more than pure tech assets?

Arthur Hayes: Yes, I think this shift is beginning now. A friend just sent me the latest cover of The Economist, which portrays Nvidia CEO Jensen Huang as a magical wizard, as if Nvidia has no cash flow problems, no circular financing, vendor financing, or similar "Enron 2.0" accounting tricks—just add an AI chatbot and it becomes the greatest company in history. I think this is a signal of a market top. When The Economist tells you something, you should do the opposite, because their judgment is incredibly stupid.

The current situation is very favorable for Bitcoin and gold, because politicians simply cannot stop spending. Otherwise, they would have to admit they made enormous mistakes previously, including around data centers, social media, and tech companies' use of user data. If the government admits there are problems with the AI direction and changes policy, it would have to cancel support for the industry, let Elon and others bear their own cost of capital, stop providing special regulatory arrangements, and stop using the nationalist narrative of US-China competition to secure more investment for loss-making companies.

At that point, companies will either make money or they won't. Companies like Anthropic should also disclose real profits, not just revenue figures; if they keep burning cash, they should explain the unit economics of the inference business. Potential IPO or secondary market investors need to see this information.

But this clearly won't happen, because politics doesn't work that way. This is exactly why Bitcoin, gold, and other similar assets will perform well: we have entered the capital waste phase. The government will come up with large amounts of newly created money to roll over these loans, to cover up previous mistakes, because it cannot admit that it wasted enormous amounts of money.

Host: In the past, the government spent money on AI, M2 rose, but the funds did not flow into crypto assets. Are you saying that capital allocation to AI is a capital misallocation, and the money used to deal with this misallocation will ultimately flow into digital assets?

Arthur Hayes: Yes.

Host: At that point, will the same group of investors be buying crypto assets, or will it be a broader set of macro investors, companies, and funds? As the CLARITY Act advances, regulators send supportive signals, and areas like tokenization heat up, could it be venture capital firms buying Bitcoin after exiting Anthropic? Or is this just a broader trend shift?

Arthur Hayes: This is essentially just central banks expanding their balance sheets. I can't point to any one person who will definitely buy Bitcoin. I think many venture capital firms will instead suffer severe losses. They told investors they achieved extremely high paper returns from investing in these AI labs. Maybe Anthropic can go public, but it needs to complete an IPO as soon as possible, because more and more people are raising questions now.

OpenAI's situation is more difficult; it needs a government bailout, or some form of merger. Sam Altman must design impressive financial engineering to get a deal done. As for Anthropic, it depends on whether Dario Amodei can pull it off.

But the funds of many venture capital firms are effectively locked up. If these companies go public and their stock prices fall 50% to 60%, and liquidity then disappears, without a government bailout, I don't know how these firms can achieve the DPI they promised investors. Therefore, this is not "people in the AI circle will invest in crypto assets." People in the AI circle have no cash, only some paper assets.

If central banks continue to push up these assets, they might be able to exit and get cash, then buy crypto assets. But a more appropriate understanding is that central banks are conducting broad balance sheet expansion to cover up capital misallocation. Bitcoin was born exactly for this. What happened in 2009? Policymakers expanded their balance sheets to cover up capital misallocation in housing. This time it's essentially the same, just larger in scale, and the target has become AI debt.

Who is controlling the market narrative?

Host: There are many factors involved here. AI founders like Sam, Dario, and Elon were once valued by the government; Trump advocates capital repatriation and nationalist policies, and Japan has also begun pushing for capital repatriation; Bessent is trying to figure out how to finance the entire system. Who is controlling the narrative now? It looks like Bessent is coordinating everything: getting Japan to unwind carry trades and sell bonds, while having Warsh cooperate to finance U.S. Treasuries. Is that right?

Arthur Hayes: Bessent is a firefighter. What really sets the narrative is the market: the 10-year U.S. Treasury yield rising to 4.8% sets the narrative, and the dollar rising to 160 against the yen also sets the narrative. Bessent is just the only capable person in charge. He faces many spinning plates at the same time and needs to keep them from falling as much as possible, so he can only reach a deal here and another deal there.

Policymakers are completely constrained by the market and can only do their best under all the imbalances accumulated over the past decades. Ultimately, these problems can be traced back to the post-World War II system, the result of nearly a century of events interacting continuously, eventually forming today's situation.

Therefore, individual politicians matter, but not that much, because in the end they cannot defeat math and compound interest.

The Fed Chair will ultimately still cooperate with government spending

Host: If the market controls the narrative, who controls the money printer? Is the one controlling the narrative the same person as the one controlling the money printer?

Arthur Hayes: In practical terms, Warsh is the Fed Chair, he controls the balance sheet, and he can also create money. But ultimately, one can refer to former Fed Chair Arthur Burns's speech "The Anguish of Central Banking." He delivered this speech in 1979, I can't remember the location. Burns was the Fed Chair before Volcker, and financial historians generally believe he allowed inflation to run loose.

The core argument of that speech is that Fed chairs come in believing in sound monetary policy and claiming they will defend the Fed's independence. But at the end of the day, they are still a subsidiary part of the American system. The American people vote for politicians who push specific spending programs, so what standing does the Fed chair have to oppose that?

So no matter how much you believe your job is to protect Fed independence and the value of the dollar, your real job is still to accommodate the government spending that the American people voted for. Ultimately, you will always print money, and you will always give the president what he wants in some form. History has already proven this — it does not matter whether Republicans or Democrats are in power, the result is the same. What you said before you sat in that chair does not matter. Once you are in it, your superiors will always demand that you create money in some way.

Warsh reportedly resigned from his position as a Fed governor around 2011 because he opposed quantitative easing. For the next 15 years, he made a lot of tough statements in the private sector, but at the time his opinions did not affect policy. Now that he is at the Fed, what has he done? He set up a working group, and a working group will ultimately do nothing but produce a report.

Host: So you think he will not raise rates at the meeting in a week or two?

Arthur Hayes: I think he will keep rates unchanged. They can easily find some third-order rate of change in some government inflation metric — one that does not include the things people actually spend money on — and then claim that this metric is falling year-over-year, so rates can stay unchanged.

At the same time, nominal US economic growth last quarter was about 8%, while short-term rates are only 3.5% to 3.75%. This is a textbook move. By keeping rates unchanged, Warsh can continue to appear relatively hawkish on one hand, while on the other hand claiming that reserve management purchases are not real balance sheet expansion or quantitative easing, but merely operations to deal with technical issues in the repo market. Most American voters do not really understand the repo market, and that explanation may be enough to get by. Bessent, meanwhile, will continue trying to keep everything balanced on the other side and avoid the problem blowing up on his watch.

Bitcoin may break its all-time high by year-end, but the rally will not be smooth

Host: Warsh spent five minutes at Jackson Hole criticizing forward guidance, but at the start of the speech he also talked about two hiking experiences. If he raises rates a week and a half later, the market will see that as forward guidance. Looking ahead, what does this mean for the market? Will Bitcoin hit an all-time high before year-end? Will it keep rising into the first half of next year? Will Clemente recently said he has never been so confident about the long-term outlook. Although there will still be volatility in the short term, the direction of financial repression is already very clear. What is your view on the timeline and outlook for Bitcoin and the crypto market?

Arthur Hayes: I think Bitcoin could break its all-time high before the end of the year. But ultimately, before the U.S. midterm elections, the government still cannot reveal its true intentions too clearly. The issue American voters care about most is affordability, and Trump must find a way to explain why the various easing measures the government is taking do not amount to printing money.

I don't know whether Bitcoin rising to $500,000 the day before the election would actually help Trump. For global crypto asset holders, of course we hope that happens. On one hand, the structural factors we discussed earlier require the government to create money, and we know that will happen; on the other hand, American politicians must also manage a clear political timeline.

They cannot let the outside world think they are pushing the Federal Reserve to print money. As Scott Bessent said in his Wall Street Journal op-ed, by now most Americans believe the Fed is a maker of inequality. Therefore, the government must maintain an appearance that convinces people it still cares about the purchasing power of the money earned by American taxpayers.

So, I am very bullish, and I completely agree with the views of your previous guest. But the market may be very volatile, perhaps rising quickly first, then moving sideways for a period, or even pulling back somewhat, before continuing to rise. As we move step by step toward massive money printing, this rhythm will repeatedly appear in the market.

Host: As Rob said, the oven is still preheating, and the money printer is also in the preheating stage. The food has not been put in yet, and the pizza is still waiting, but all of this is coming.

Ethereum is a large-cap asset with a better risk-reward profile in a liquidity-driven rally

Host: You once wrote that you built what may be the largest Ethereum position ever. Do you still maintain a long-term view? Our audience might say that you will just sell ETH to them after the show. How long do you plan to hold? What does your current portfolio look like?

Arthur Hayes: Ethereum is the least popular large-cap token in the market. Ultimately, if you want to take on more risk than Bitcoin but do not want to suffer a 75% overnight drop because of a protocol problem, then Ethereum is the appropriate choice.

It was also the worst-performing large-cap token of the last cycle and has not even broken above its 2021 all-time high of nearly $5,000. Therefore, I think Ethereum's risk-reward is very good. That is also why, in this liquidity-driven rally, ETH is one of our larger positions.

We also hold some other assets with similar logic, but the position sizes are significantly smaller, such as ether.fi and Ethena.

EUR/JPY is a leading indicator of accelerating USD liquidity

Host: In your latest article, you said that EUR/JPY is currently the most noteworthy indicator, because it is the only leading indicator of a short-term acceleration in the pace of USD liquidity creation. Anyone who understands Bitcoin's logic knows that USD liquidity creation is the core of the fiat debasement trade. But an acceleration in the pace of liquidity creation is a second-order change, meaning money printing is starting to accelerate. Why can EUR/JPY tell us in advance that money supply growth will accelerate?

In addition, Bessent often sends signals to the market, and the market trades ahead of those signals. In a recent interview, he used "potential energy" and "kinetic energy" to describe this relationship. When he hints to the market that the Treasury will buy back long-term Treasuries, the market trades ahead of it, and this builds up a lot of potential energy. When the policy finally lands, will we see "buy the rumor, sell the fact"? Or is the actual scale of money creation enough to validate his signal and push the market higher than current expectations?

Arthur Hayes: We have clearly already increased positions before the Fed balance sheet rose. The balance sheet is indeed rising now, but compared with COVID or 2009, the magnitude is not yet extreme. That is why Bitcoin only rose from about $63,000 to $80,000, which is not a particularly large gain.

To solve the perception problem caused by a massive expansion of the Fed balance sheet, a real crisis is needed. On the yen side, the crisis is this: in EUR/JPY trades, the side that is long yen, including GPIF, Nomura Securities, and Japanese retail investors like "Mrs. Watanabe," are selling foreign assets because the Japanese government has asked them to do so. To avoid these institutions directly selling assets, they need to be provided with loans so they can finance through repo. This is one pillar of balance sheet expansion, and it will also drive the yen higher.

The problem on the euro side lies in the repo market. Large French banks led by BNP Paribas, Crédit Agricole, and Société Générale account for about 20% of the repo market. If there is a problem with the euro, the market that takes the hit first will be France, because Japan holds a large amount of French debt.

If Japan cannot sell US assets because the US has a large number of military bases in Japan, then it can sell European assets, and the first ones it will sell will be French assets, including French government bonds OATs and French bank bonds.

As the situation in France deteriorates, France cannot legally print its own money under the rules of the euro system. But the new French political figures coming to power may believe that as President of France, not President of the EU, their duty is to meet the needs of the French people and the nation. France needs more funds and also needs to achieve depreciation within the euro system. If it does not exit the euro, the French government may demand that the French central bank implement quantitative easing domestically. This is not legal under EU rules, but the French government may act under the pretext of saving its own bond market.

The EU, in turn, may say to Le Pen and Mélenchon: "I have the ability to create euros and save the French bond market, but since you are unwilling to bow to me, I will not buy French bonds." Since neither side is willing to compromise under their respective power structures, this could ultimately result in a de facto "soft Frexit." This is the euro short thesis.

The Federal Reserve has already pivoted to quantitative easing since last December to support the repo market. The repo market finances short-term U.S. Treasuries, and the person currently issuing the most short-term Treasuries is none other than Scott Bessent, so these issues ultimately remain part of the same trade.

If the euro falls from around 182 to 140 or even 120 against the yen, the French banking system will face serious problems and can only be resolved by creating money. This could also mean the end of the euro system, because France cannot unilaterally print money without departing from the European Central Bank, the central institution.

If French banks fear capital controls or some kind of "quasi-euro-lira" monetary system in their country, they will need to exit the U.S. repo market and repatriate capital. In that case, the commercial bank balance sheets that the Federal Reserve thought it could rely on would no longer exist.

The Federal Reserve would therefore have to increase reserve management purchases, and it is already doing so. The Federal Reserve can explain this away as not being quantitative easing using technical reasons such as duration, and hopes the American public will not understand its true meaning. This is how money creation happens on the euro short side, and it is why I believe the euro-yen exchange rate can reflect whether two specific factors forcing the Federal Reserve to rapidly increase money supply have already been triggered.

What can truly push Bitcoin to $250,000 or $500,000 is these actual changes, not just Bessent's statements about future policy.

Host: You call Scott Bessent "Buffalo Bill Bessent" — is that because he issued a large amount of short-term Treasuries (bills)?

Arthur Hayes: No, that nickname comes from Buffalo Bill, the serial killer in "The Silence of the Lambs." I call him the "nation's serial killer": if you do business with Iran, sanctions will come after you.

AI assets may still rise, but could underperform scarce assets

Host: From an investor's perspective, how should one allocate a portfolio in an environment where market structure is changing? Many listeners have high crypto allocations, but quite a few have left the crypto market and turned to AI, earning very high returns in storage and capex trades. If we include both crypto assets and other assets, how should one allocate?

We have been discussing the barbell strategy: on one end are hard money and scarce assets, which benefit from currency debasement and loose monetary policy; on the other end are on-chain businesses with reasonable fundamental valuations that can actually generate profits, which benefit from the crypto industry gaining greater legitimacy. Which end of the barbell is likely to perform better? And what about other assets?

Arthur Hayes: If you are an AI investor and have already made a lot of money through AI, that is because the rate of change in AI's development speed was very high in 2025 and 2026. But that phase is now over. This is not to say that AI-related assets will not rise, but their gains may not be as large as before, because the market has entered the phase of asking "was it correct to put so much money in before," and markets usually peak at this stage.

The Nasdaq could still rise another 40%, 50%, or even 60%, but at the same time, Bitcoin could rise to $1 million, gold could rise to $15,000, and defensive assets such as ExxonMobil could also rise several times over. AI assets will still rise, but may underperform other assets. As for which other assets to choose, that depends on each person's knowledge and preferences.

I am obviously focused on the crypto market. In this macro environment, I believe Bitcoin is the fastest horse, and that is one end of the barbell. The other end requires considering which assets will benefit when people begin to believe that politicians will not continue printing money.

I think this situation will not emerge until at least the 2028 U.S. presidential election. By then, the opposition Democratic Party may propose raising taxes, because the wealthiest have made a lot of money in this cycle, while ordinary people have become poorer and inflation is also rising. Whether or not the Democrats actually raise taxes in the end, the key point is that the market will worry that they will win the election. They are very likely to win, because American politics often swings back and forth like a pendulum. At that point, the market may begin to worry that future money printing will not be as large as previously expected, and investors will need to allocate to the other end of the barbell.

As for me, I hold a significant equity stake in a volatility hedge fund that expresses this view through options-style trades. Investors can also choose other types of businesses: ones that can still perform well when the money printer is turned off and monetary conditions tighten again.

Host: Our understanding is that one end of the barbell is fiat-debasement assets in the crypto market, such as Bitcoin and Zcash. They have higher upside, but drawdowns can also be large, especially Zcash. The other end consists of assets like Hyperliquid and ether.fi. After investor unlocks end, they have better token economic models and buyback mechanisms, so downside support may be higher, but upside is lower because fundamental valuation has a ceiling, and only business expansion can push token prices further.

We have been doing the podcast for many years, and the industry has finally entered a phase where it can deliver actual results, which is also why we believe the bear market is over. In addition to policy changes, tokens themselves are beginning to have real businesses and good performance. Many early participants have already made money and left, but the industry seems to have entered a mature stage similar to the internet bubble after its 2001 crash. Since then, assets rose for 25 years over the long term, with slow growth, repeated bottoming, and major drawdowns along the way. The crypto industry will still have cycles, but whether in terms of products or external output, it seems to be entering a long-term development phase, and there is more substantive value in the industry than before.

Arthur Hayes: Good, hopefully so.

Hayes believes HYPE's current risk-reward is not ideal

Host: At what level are you planning to buy Zcash again?

Arthur Hayes: As for HYPE, I still think its risk-reward is not good. That is not to say it will not rise, it definitely will rise further. But while taking on the same risk capital, its gains may not be as good as Ethena's.

That is my current view on Hyperliquid. As for Zcash, it also depends on progress in work such as formal verification.

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