Arthur Hayes, the former CEO of BitMEX, has outlined his expectations for the cryptocurrency market, predicting a period of significant growth driven by global liquidity expansion. However, he cautions that most new layer-1 projects are unlikely to survive this phase due to their economic structures.
Hayes believes the crypto market is entering a phase where liquidity expansion will be the primary driver of growth, superseding factors like halvings or hype. He anticipates governments will inject substantial capital into the economy ahead of political campaigns, particularly in the United States. In such an environment, Hayes expects the crypto market to experience vertical growth, but with a clear distinction between projects that can endure market cycles and those that only thrive during them. He foresees a scenario where strong projects become stronger, while speculative experiments collapse rapidly.
Long-Term Survivors in the Crypto Space
When asked to identify the networks he believes will remain relevant in the long term, Hayes presented a concise list: Bitcoin, Ethereum, Solana, and Zcash. He advised that all other layer-1 projects should be viewed primarily as experiments rather than investments.
Hayes's personal investment strategy aligns with this view. He recently confirmed that Zcash is the second-largest holding in his family office, Maelstrom, with only Bitcoin held in a larger quantity. This allocation reflects his strong conviction that privacy-focused technology is poised to become a central theme in digital finance.
Analysis of New Layer-1 Projects
Hayes's commentary on recently launched networks followed his articulation of his long-term outlook. He pointed out a recurring pattern in the industry: projects secure massive funding rounds, engage in aggressive marketing, maintain very small circulating supplies, boast enormous fully diluted valuations, and experience an initial price surge fueled by retail speculation.
He identified Monad, a new layer-1 project backed by Paradigm's $225 million raise and launched with a MON token airdrop, as the latest example of this trend. Hayes anticipates that MON will follow the trajectory of other "high FDV, low-float" assets, characterized by initial excitement followed by significant declines as insider supply enters the market.
Hayes expressed a strong opinion that the token could lose as much as 99% of its value once insider supply becomes available. He clarified that this assessment is not a critique of the technology itself but rather a warning regarding token economics designed to benefit early investors at the expense of later ones.
Bullish Outlook Amidst Warnings
Despite his critical remarks regarding Monad's tokenomics, Hayes remains optimistic about the broader crypto market. He believes the most aggressive phase of the new crypto cycle is yet to come and that liquidity growth, rather than technical upgrades or prevailing narratives, will be the primary catalyst.
According to Hayes, Bitcoin is the first asset to react when the global monetary system undergoes changes. It experiences panic during credit tightening and rallies first when governments increase liquidity. He views Bitcoin as "the only fire alarm central banks can't unplug."
This highlights the nuance in his message: while the crypto space may be entering a significant bull phase, Hayes anticipates a smaller number of successful projects compared to previous cycles.