Arthur Hayes: AI Capital Misallocation Will Ultimately Benefit Bitcoin and Gold

Author | The Rollup
Editor | Wu Blockchain

On September 8, 2026, Maelstrom CIO Arthur Hayes was interviewed on The Rollup podcast to discuss the global macro environment and the outlook for the crypto market. He believes that Japan's gradual unwinding of the massive yen carry trade, 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 a key leading indicator for observing this change. Hayes also discussed the unit economics of the AI industry, possible government bailouts and their impact on fiat devaluation trades, and introduced Maelstrom's current market positioning, explaining why Ether is an important holding for them in this liquidity cycle.

Editor's note: Arthur Hayes is known for his strong opinions and bold predictions, but his market forecasts often change, and he has repeatedly admitted that his prediction failure rate is high. Therefore, readers should not treat his specific price targets, timing, or trading actions as investment advice. More valuable than the predictions themselves is Hayes's analytical framework and thought process regarding the relationship between global liquidity, monetary policy, fiscal systems, and the crypto market. Wu Blockchain republishes his articles mainly to provide readers with a reference perspective for observing the macro and crypto markets.

Guest remarks do not represent Wu Blockchain's views and do not constitute any investment advice. Please strictly comply with local laws and regulations. Audio transcription and translation were done by GPT and may contain errors.

Japanese Capital Repatriation Could Be a Catalyst for the Next Crypto Market Rally

Host: Arthur, great to have you back. Welcome to the bull run. On-chain markets are heating up, major coins are rising, but institutions and the AI crowd still seem to be on the sidelines. I attended the Fed's Jackson Hole conference last week. Kevin Warsh mentioned at the beginning of his speech that he had raised rates twice at Jackson Hole, once very difficult and once very easy; the market reaction this week has been very strong. What is the current state of the macro environment? Scott Bessent and Warsh are both taking action. What do you think?

Arthur Hayes: First, Warsh doesn't matter; what he says doesn't matter. He gave that speech about two weeks ago, but I think the really important developments happened recently. I wrote an entire article about this, and it's my main focus right now.

In modern global financial markets, Japan is often associated with various major changes. In mid-to-late July, Japanese Finance Minister Shunichi Suzuki said that domestic institutions need to reassess their asset allocation standards, reduce holdings of foreign assets, and increase investment in domestic Japanese assets. He was actually referring to the Government Pension Investment Fund (GPIF). GPIF is Japan's largest pension fund and has a quasi-governmental nature. At that time, the dollar-yen exchange rate was around 160 to 163.

Everyone may agree with this direction, but the question is whether the government will take measures to make it happen. The last time GPIF made a major adjustment to its asset allocation was after 2012, and individuals and corporations followed suit. At that time, Shinzo Abe implemented Abenomics, stimulating the economy through money printing, and wanted GPIF to increase its allocation to foreign securities and reduce its allocation to domestic securities. It took him two years to get GPIF to formally agree, which involved replacing opponents and appointing supporters of this direction. Subsequently, GPIF released a framework to increase foreign assets and reduce domestic assets, the market started moving, the dollar-yen rose, the yen weakened, Japanese investors began investing overseas, and others followed.

Therefore, I initially thought GPIF might still need two to three years before it would start selling US Treasuries and buying Japanese government bonds, and that this was not something requiring immediate attention. But then the first intervention in the yen occurred: Bessent sold euros and bought yen, and suggested that the Fed remove the single counterparty limit on the Foreign and International Monetary Authorities (FIMA) Repo Facility. He was actually pressuring Warsh to do his job and remove this limit. This means institutions like GPIF would not have to sell US Treasuries; instead, they could use US Treasuries as collateral to obtain dollar loans from the Fed, then sell dollars and buy yen in the foreign exchange market, and finally bring the funds back to Japan.

This is only part of the puzzle, as Warsh still needs to convene the relevant financial subcommittee, which must agree to do so. After that, the US Treasury proposed increasing the size of Treasury buybacks by $20 billion, but that is not significant relative to a bond market of about $40 trillion. Bessent said again last week or earlier this week that the Bank of Japan needs to raise rates faster. Similar statements have been made before, but the key remains what actions he is prepared to take.

There is also a G20 meeting this week. I believe some kind of agreement may have been reached privately during the meeting, and the Japanese side finally got the message. Bloomberg reported that GPIF held an extraordinary meeting in August. August is a holiday month in Japan, and holding an extraordinary meeting at this time is very unusual. We don't know what was discussed, but previously the Japanese government had requested an increase in Japanese asset allocation, and Bessent also called for Japan to increase domestic assets and sell US assets. Subsequently, the dollar-yen exchange rate fell from 160 to 155 in one trading day, and the euro-yen also fell by about 3 yen during Asian trading hours, a significant move.

I believe an announcement will come soon: either the FIMA Repo Facility limit will be raised, or GPIF has already started adjusting the allocation weights between domestic and foreign assets. Crypto and other markets reacted overnight. At the same time, Waller said inflation doesn't seem that bad, and the Fed may not need to raise rates. Putting these things together, the goal is to weaken the dollar and strengthen the yen. This has been one of the main goals of the Trump administration, because they are trying to reshape the global trade framework.

To achieve this goal, the yen must appreciate. The yen is probably the most undervalued currency in the world, second only to the yuan. It is difficult for the US to take the same action against China, but it can influence Japan because Japan depends on US security guarantees. I think this is why the crypto market is rising. The market has been digesting various pieces of information, and now there is finally a substantive change. The dollar-yen fell from 160 to 155 without clear news, indicating that something has changed.

Therefore, I think the market has begun to move. Crypto assets and other assets rose overnight, while the S&P 500 was roughly flat or down, and tech stocks and the AI trade did not rise significantly, indicating that there is a liquidity logic behind this. In the coming days or weeks, more information may be disclosed proving that an agreement was indeed reached during the G20, and corresponding arrangements will be introduced to create dollar liquidity, suppressing the dollar and boosting the yen.

Japan Inc. Is Unwinding the World's Largest Yen Carry Trade

Host: Weakening the dollar means boosting our assets. You didn't discuss the yen carry trade in detail in your latest article. Many people think of the carry trade or basis trade when they think of Japan and the yen. Is this related to the logic you just described? If so, what impact will it have?

Arthur Hayes: I refer to Japanese society as "Japan Inc.," which operates the world's largest yen carry trade. If you look at Japan's overall balance sheet and include private sector assets, you will find that Japan has actually been printing yen and buying foreign assets.

As the yen depreciates, the value of Japan's holdings (such as US tech stocks) rises, and Japan's overall performance has been very strong. Some people focus only on single indicators like the debt-to-GDP ratio, but Japan should be viewed as a whole. Although Japan claims to be a capitalist society, it has strong collectivist and socialist traits, with capitalism being more of an external form. Ultimately, there is a "Japan Inc.," and the yen carry trade is a national trade, with Japan being the largest participant in this trade.

Once GPIF is asked to shift, "Japan Inc." will also act: sell foreign bonds and stocks, sell foreign currencies, buy yen, bring funds back home, and invest in Japanese government bonds, local businesses, and real estate. This is exactly the government's directive. It takes some time to start, but once it begins, one should not stand against this trend.

The problem facing the US is that Japan has held these assets for the past 30 years, driving the rise of the US market. When the entire US system relies on financial gains from rising stock markets and continuous debt issuance, how should this trade be exited? The only response for the US is to print money and take over the trade that Japan has been doing.

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

US Monetary Policy Is No Longer Truly Restrictive

Host: Warsh talked about the deflationary effects of AI and innovative technologies at Jackson Hole, and expressed concerns about inflation at the end of his speech. The changes you describe seem to mark the beginning of a broader rotation. After the pandemic, US financial policy has been extremely loose; the past four years have been in a high interest rate environment, quantitative tightening ended about six months ago, and since then the Fed's balance sheet has stabilized and begun to rise. Do you think US financial policy is shifting from a restrictive environment to a more accommodative and 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 Treasury bills and bonds, draining $2.5 trillion from the reverse repo facility. For holders of crypto assets and other assets, the market re-entered an upward phase from that point.

As you said, the AI trade is their "get out of jail free card." The US has printed a massive amount of money over the past five or six decades. According to normal mathematical logic, interest costs and debt scale grow exponentially, and it is almost impossible to solve this through economic growth alone. But now there is a new thing called AI. The narrative is: as long as the US develops AI and wins the AI race with China, the debt problem will disappear and productivity will increase dramatically.

That's why Warsh, Trump, Bessent, and everyone else are talking about AI. Only in this way can they explain to voters: don't worry about how much the government spends, and don't worry that government spending as a percentage of GDP is higher than ever except during war or pandemic periods, because the US has AI and will win the AI race. But these people may not even know what AI specifically means; they just accept the narrative sold to them by Dario, Sam, and Elon.

AI will also be incorporated into the same trade. If AI is the only reason the government uses to explain how to solve the deficit problem and why there is no need to worry about spending, then what will the government do when large AI labs come under pressure due to unsustainable unit economics? It will bail out these companies, and the way to bail them out is to inject more money.

Therefore, the Japan-related trade structure and Europe's problems will prompt 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 this will also become a reason for it to continue injecting massive amounts of money into the market. The combination of these two factors will help crypto assets reach new highs.

AI Capital Misallocation Will Ultimately Benefit Bitcoin and Gold

Host: Over the past 6 to 18 months, bitcoin's fiat devaluation trade logic seems to have failed; bitcoin has underperformed, while gold has risen and tech stocks have significantly outperformed the market. With strong performance in AI capital expenditure, storage, and other areas, will the shift you describe benefit gold, bitcoin, and other fiat devaluation trade assets more than pure tech assets?

Arthur Hayes: Yes, I believe this change is now beginning. A friend just sent me the latest cover of The Economist, depicting Nvidia CEO Jensen Huang as an all-powerful wizard, as if Nvidia has no cash flow problems, no circular financing, supplier financing, or accounting tricks like "Enron 2.0"; just add an AI chatbot and it becomes the best 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 very foolish.

The current situation is very favorable for bitcoin and gold, because politicians can no longer stop spending. Otherwise, they would have to admit the huge mistakes they made before, including issues surrounding data centers, social media, and tech companies' use of user data. If the government admits that the AI development direction is problematic and changes policy, it would have to withdraw support for the industry, force people like Elon to bear capital costs without special regulatory arrangements, and no longer seek more investment for loss-making companies under the nationalist narrative of US-China competition.

At that point, companies either make money or they don't. Companies like Anthropic should also disclose actual profits, not just revenue figures; if they continue to burn money, they should clarify the unit economics of their inference business. Potential IPO or secondary market investors need to see this information.

But this obviously won't happen, because politics doesn't work that way. This is exactly why bitcoin, gold, and other similar assets perform well: we have entered a phase of capital waste. The government will generate a large amount of newly created money to extend these loans to cover up previous mistakes, because it cannot admit to wasting huge sums of money.

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

Arthur Hayes: Yes.

Host: Will it be the same investors buying crypto assets, or will it be a broader range of macro investors, companies, and funds? With the advancement of the CLARITY Act, signals of regulatory support, and heating up in areas like tokenization, will venture capital funds buy bitcoin after exiting Anthropic? Or is this just a broader trend shift?

Arthur Hayes: This is essentially just central bank balance sheet expansion. I cannot point to any specific person who will definitely buy bitcoin. I believe many venture capital funds will actually suffer severe losses. They tell investors that they have achieved extremely high book returns by investing in these AI labs. Maybe Anthropic can go public, but it needs to do so soon, because the number of skeptics is increasing.

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

But a large portion of many venture capital funds' money is actually locked up. If these companies' stock prices fall 50% to 60% after listing and liquidity disappears, I don't know how these companies can deliver the DPI promised to investors without a government bailout. So it's not that "the AI crowd will invest in crypto assets." The AI crowd has no cash, only some paper assets.

If central banks continue to push up these assets, they may be able to exit and get cash, and then buy crypto assets. But a more appropriate understanding is that central banks are engaging in broad balance sheet expansion to cover up capital misallocation. Bitcoin was created for this. What happened in 2009? Policymakers expanded their balance sheets to cover up capital misallocation in the real estate sector. This time it is essentially the same, just on a larger scale, with the target being AI debt.

Who Controls 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 to promote capital repatriation; Bessent is trying to finance the entire system. Who controls the narrative now? It looks like Bessent is coordinating everything: getting Japan to unwind the carry trade, sell bonds, while getting Warsh to cooperate with US Treasury financing. Is that the case?

Arthur Hayes: Bessent is the firefighter. The real narrative is determined by the market: a 10-year US Treasury yield rising to 4.8% will dominate the narrative, and a dollar-yen rising to 160 will also dominate the narrative. Bessent is just the only capable person in charge. He faces many spinning plates and needs to prevent them from falling, so he can only make a deal here and another deal there.

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

Therefore, individual politicians matter, but not that much, because they ultimately cannot defeat mathematics and compound interest.

The Fed Chair Will Ultimately Succumb to Government Spending

Host: If the market controls the narrative, then who controls the printing press? Are the person controlling the narrative and the person controlling the printing press the same?

Arthur Hayes: Actually, Warsh is the Fed Chair; he controls the balance sheet and can create money. But ultimately, one can refer to former Fed Chair Arthur Burns's speech "The Anguish of Central Banking." He gave this speech in 1979; I can't remember the location. Burns was the Fed Chair before Volcker, and financial historians generally believe he let inflation get out of control.

The core point of that speech is that Fed chairs come into office believing in sound monetary policy and claim they will defend the Fed's independence. But ultimately, they are still an appendage of the American system. The American public votes for politicians who implement specific spending programs; what right does the Fed chair have to object?

So no matter how much you believe your duty is to protect the Fed's independence and the value of the dollar, the real duty is still to comply with the government spending that the American public voted for. Ultimately, you will always print money and will always satisfy the president's demands in some form. History shows that the result is the same whether Republicans or Democrats are in power. It doesn't matter what you said before taking the job; once in office, your superiors will always ask you to create money in some way.

It is reported that Warsh resigned from the Fed Board of Governors around 2011 because he opposed quantitative easing. Over the next 15 years, he made many tough statements in the private sector, but his opinions did not influence policy. Now that he is at the Fed, what has he done? He set up a working group, and the working group will ultimately just submit a report.

Host: So you think he won't 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 from a government inflation indicator that excludes items people actually spend money on, and then claim that the year-over-year rate of that indicator is declining, allowing them to keep rates unchanged.

Meanwhile, the US nominal economic growth rate last quarter was about 8%, but short-term rates are only 3.5% to 3.75%. This is textbook operation. By keeping rates unchanged, Warsh can continue to appear hawkish while claiming that reserve management purchases are not real balance sheet expansion or quantitative easing, but just operations to address technical issues in the repo market. Most American voters don't really understand the repo market, and this explanation may be enough to get by. Bessent will continue to work on the other side to maintain balance and prevent problems from blowing up on his watch.

Bitcoin May Break Its All-Time High Before Year-End, but the Rise Won't Be Smooth

Host: Warsh spent five minutes at Jackson Hole criticizing forward guidance, but at the beginning of his speech, he talked about two rate hike experiences. If he raises rates in a week and a half, the market will view it as forward guidance. What does this mean for the market's future? Will bitcoin hit a new all-time high before year-end? Will it continue to rise into the first half of next year? Will Clemente recently said he has never been more confident about the long-term outlook. Although there will still be short-term volatility, the direction of financial repression is already very clear. What are your views on the timeline and outlook for bitcoin and the crypto market?

Arthur Hayes: I believe bitcoin may break its all-time high before year-end. But ultimately, before the US midterm elections, the government still cannot reveal its true intentions too clearly. The most pressing issue for American voters is affordability of living, and Trump must find a way to explain why the various easing measures the government is taking do not constitute money printing.

I don't know if bitcoin rising to $500,000 the day before the election would actually help Trump. For global crypto asset holders, we certainly 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 Fed to print money. As Scott Bessent said in a Wall Street Journal op-ed, so far, most Americans believe the Fed is a creator of inequality. Therefore, the government must maintain an appearance that it still cares about the purchasing power of the money American taxpayers earn.

So I am very bullish and completely agree with your previous guest. But the market may be very volatile; it may first rise quickly, then consolidate for a while, or even pull back, and then continue to rise. As we move step by step toward massive money printing, this rhythm will repeat in the market.

Host: As Rob said, the oven is still preheating, and the printing press is also in the preheating stage. The food hasn't been put in yet, the pizza is still waiting, but it's all coming.

Ether Is a Large-Cap Asset with Good Risk-Reward in a Liquidity-Driven Market

Host: You wrote that you built possibly the largest Ether position in history. Do you still maintain a long-term view? Our audience might say that after the show, you'll sell ETH to them. How long do you plan to hold? What does your current portfolio look like?

Arthur Hayes: Ether is the most unpopular large-cap token in the market. Ultimately, if you want to take on more risk than bitcoin but don't want to see a 75% drop overnight due to protocol issues, then Ether is the right choice.

It is also the worst-performing large-cap token of the previous cycle, and it hasn't even broken its 2021 all-time high of nearly $5,000. Therefore, I think Ether's risk-reward is very good. This is also why ETH is one of our larger holdings in this liquidity-driven market.

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

Euro-Yen Is a Leading Indicator of Accelerating Dollar Liquidity

Host: In your latest article, you mentioned that the euro-yen is currently the most important indicator to watch because it is the only leading indicator of accelerating dollar liquidity creation in the short term. People who understand bitcoin's logic know that dollar liquidity creation is the core of the fiat devaluation trade. But the acceleration of liquidity creation is a second-order change, meaning money printing is starting to accelerate. Why can the euro-yen tell us in advance that money supply growth will accelerate?

Also, Bessent often sends signals to the market, and the market trades these signals in advance. He recently used "momentum" and "kinetic energy" in an interview to describe this relationship. When he hints to the market that the Treasury will buy back long-term government bonds, the market trades in advance and accumulates a lot of momentum. When the policy is finally implemented, will there be a "buy the rumor, sell the news" situation? Or is the actual scale of money creation enough to fulfill his signals and push the market above current expectations?

Arthur Hayes: We significantly increased our positions before the Fed's balance sheet started to rise. The balance sheet is indeed rising now, but compared to the COVID pandemic or 2009, the magnitude is not extreme. That's why bitcoin only rose from about $63,000 to $80,000, which is not a particularly large increase.

To solve the perception problem caused by a large expansion of the Fed's balance sheet, a real crisis is needed. The crisis on the yen side is that those who are long yen in the euro-yen trade, including GPIF, Nomura Securities, and Japanese retail investors known as "Mrs. Watanabe," are selling foreign assets because the Japanese government requires them to do so. To prevent these institutions from selling assets directly, they need to be provided with loans so they can finance through repo transactions. This is one pillar of balance sheet expansion and will also drive yen appreciation.

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 are problems with the euro, the first market to be hit will be France, because Japan holds a large amount of French debt.

If Japan cannot sell US assets because the US has many military bases in Japan, it can sell European assets, and the first to be sold will be French assets, including French government bonds (OATs) and French bank bonds.

As the situation in France deteriorates, France cannot legally print money on its own under the rules of the euro system. However, newly elected French politicians may consider themselves the president of France, not the president of the EU, and have a responsibility to meet the needs of the French people and the nation. France needs more money and needs to achieve devaluation within the euro system. If it does not exit the euro, the French government may ask the French central bank to implement quantitative easing domestically. This action is illegal under EU rules, but the French government may take action under the pretext of saving the domestic bond market.

The EU may tell 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 within their respective power structures, a de facto "soft exit" may eventually form. This is the logic for shorting the euro.

Since last December, the Fed has shifted to quantitative easing to support the repo market. The repo market finances short-term US Treasuries, and the largest issuer of short-term Treasuries right now is Scott Bessent, so these problems ultimately belong to the same trade.

If the euro-yen falls from about 182 to 140 or even 120, the French banking system will face serious problems, and the only solution will be money creation. This could also mean the end of the euro system, because France cannot unilaterally print money without leaving the European Central Bank.

If French banks worry about capital controls or some kind of "quasi-euro lira" monetary system, they will need to exit the US repo market and bring capital back home. This would mean that the commercial bank balance sheets the Fed thought it could rely on will no longer exist.

Therefore, the Fed must increase reserve management purchases, and it is already doing so. The Fed can explain that this is not quantitative easing, but for technical reasons such as duration, and hope that the American public does not understand its true meaning. This is how euro shorts create money, and why I think the euro-yen can reflect whether the two specific factors forcing the Fed to rapidly increase money supply have been activated.

What can really push bitcoin to $250,000 or $500,000 are these actual changes, not just Bessent's statements about future policy.

Host: You call Scott Bessent "Buffalo Bill Bessent" because he issues a lot of short-term Treasury bills?

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

AI Assets May Still Rise, but May Underperform Scarce Assets

Host: From an investor's perspective, how should one allocate a portfolio in an environment of structural market changes? Many listeners have high allocations to crypto assets, but many have also left the crypto market for AI, earning high returns in storage and capital expenditure trades. If one includes both crypto assets and other assets, how should one allocate?

We have been discussing a barbell strategy: one end is hard currencies and scarce assets that benefit from currency devaluation and loose monetary policy; the other end is on-chain businesses with reasonable fundamental valuations that can actually generate profits, benefiting from the crypto industry gaining greater legitimacy. Which end of the barbell may perform better? What about other assets?

Arthur Hayes: If you are an AI investor and made a lot of money from AI, it's because the rate of change in AI development in 2025 and 2026 was very high. But that phase is now over. This doesn't mean AI-related assets won't rise, but their gains may not be as large as before, because the market has entered a phase of questioning whether it was right to invest so much money before, and markets usually peak at this stage.

The Nasdaq may 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 like ExxonMobil could also multiply several times. AI assets will still rise, but their performance may not be as good as other assets. As for which other assets to choose, it depends on individual cognition and preference.

I obviously focus on the crypto market. In this macro environment, I think bitcoin is the fastest horse, and that is one end of the barbell. The other end needs to consider which assets will benefit when people start to believe that politicians will not continue to print money.

I think this situation won't occur until the 2028 US presidential election. The opposition Democratic Party may propose tax increases, because the wealthiest people made a lot of money in this round, while ordinary people became poorer and inflation is rising. Whether or not the Democrats actually raise taxes, the key is that the market will worry about them winning the election. They are likely to win, because American politics often swings back and forth like a pendulum. At that point, the market may start 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.

For me, I hold a large equity stake in a volatility hedge fund that expresses this view through options trading. Investors can also choose other types of businesses: when the printing press is turned off and the monetary environment tightens again, these businesses can still perform well.

Host: Our understanding is that one end of the barbell is fiat devaluation assets in the crypto market, such as bitcoin and Zcash. They have higher upside potential, but drawdowns can also be large, especially Zcash. The other end is assets like Hyperliquid and ether.fi. After investor unlocks end, they have better tokenomics and buyback mechanisms, which may provide higher downside support, but upside potential is lower because fundamental valuations have a ceiling, and only business expansion can further drive token prices.

We have been doing podcasts for many years, and this industry has finally entered a stage where it can "deliver actual results," which is why we believe the bear market is over. In addition to policy changes, tokens themselves are starting to have real businesses and good performance. Many early participants made money and left, but the industry seems to have entered a maturation stage similar to after the 2001 dot-com bubble burst. The subsequent assets rose for 25 years, with slow growth, repeated bottoming, and significant drawdowns during the period. The crypto industry will still have cycles, but in terms of products and external output, it seems to be entering a long-term development phase, with more substantial value in the industry than in the past.

Arthur Hayes: Great, I hope so.

Hayes Believes HYPE's Current Risk-Reward Is Not Ideal

Host: At what price do you plan to buy back Zcash?

Arthur Hayes: As for HYPE, I still think its risk-reward is not good. This doesn't mean it won't rise; it definitely will. But with the same risk capital, its gains may not be as large as Ethena's.

That's my current view on Hyperliquid. As for Zcash, it depends on the progress of formal verification and other work.