Arthur Hayes: Bullish on Bitcoin and Solana, Focus on China's Economy Rather Than the U.S. Presidential Election

The upcoming U.S. presidential election, which is drawing global attention, has become the most concerning issue for global investors in terms of how it will impact the cryptocurrency market and the overall financial market. Recently, BitMEX co-founder Arthur Hayes mentioned in an interview that regardless of the election outcome, there may be significant market volatility in the short term. However, in the medium to long term, the U.S. government is likely to continue printing money to stabilize the economy, which is seen as a positive factor for the cryptocurrency market.

Regarding the Federal Reserve's quantitative easing (QE) and China's gradually loosening monetary policies, Hayes believes that these factors indicate that global economic liquidity will drive the growth of risk assets. He also emphasizes the importance of maintaining patience and adjusting investment portfolios flexibly.

It doesn't matter who wins the election, the U.S. government will continue printing money

Regarding the U.S. presidential election, Hayes stated that in the short term, the market is likely to favor Trump because his policies align with the conventional practices in U.S. politics over the past few decades, such as tax cuts, deregulation of businesses, and increased spending that started during the Ronald Reagan era in the 1980s.

Hayes further mentioned that these policies benefit the wealthy through tax breaks, leading to stock market rallies while safeguarding basic welfare for others, without reducing defense spending. Trump's policies may gain market favor. As for Biden, Hayes indicated that Biden essentially conveys the same message but in a more complex manner, which might be off-putting. However, he also mentioned, "Regardless of who wins, the U.S. government will still print more money, so cryptocurrencies will perform well, or even surge."

If Trump wins, lack of unity within the party may hinder policy implementation

Regarding the belief that Trump would be more crypto-friendly in regulation, Hayes holds a contrary opinion. Hayes stated, "During his four-year term, Trump did not make any substantial contributions to cryptocurrencies." He added that if Trump were elected but the Republican party couldn't control both houses, his policy implementation would be limited, and many Republicans may not support his policies.

Election disputes pose the biggest risk, affecting the market

Hayes further mentioned that the real risk comes from the losing side claiming "unfair elections," which could lead to a series of social and political unrest, potentially lasting for weeks or even beyond the U.S. Presidential Inauguration Day on January 5, 2015. Such uncertainties would significantly impact market performance, possibly resulting in capital outflows in the short term. Regarding delayed election results, Hayes believes the current situation is evenly split, but the market currently favors Trump's potential victory.

Avoid radical trading on election night, prefer yoga or tennis

As for trading strategies on election night, Hayes admitted he wouldn't engage in aggressive trading but would maintain his current positions. He even mentioned that upon election results, he would opt for yoga or tennis instead of trading. Hayes also emphasized caution against excessive risk-taking, despite short-term market fluctuations. Long-term, he still believes that "whether it's Trump or Biden elected, the U.S. government will continue printing money; this is the established policy direction. The real choice for voters is how this money will be used to help certain individuals or groups, rather than choosing to save or stop printing money. So, regardless of the winner, the outcome remains the same."

Bitcoin continues to drive the crypto market, mainstream coins for risk management

Regarding predictions for the cryptocurrency market, Hayes stated that the market still revolves around Bitcoin, influencing other cryptocurrencies. He pointed out, "If Bitcoin rises, the gains of altcoins and meme coins may surpass Bitcoin because investors often perceive lower-priced coins as having more potential, although this notion can sometimes be incorrect."

Hayes emphasized that in such market rotations, it is better to choose high-liquidity mainstream coins like Bitcoin, Ethereum, and SOL, as they have high liquidity. In the event of significant market fluctuations, even if there are losses, they would only experience minor declines, allowing funds to be preserved for the next opportunity. Holding low-liquidity small coins or altcoins may lead to misjudgments and difficulties in selling, resulting in significant losses.

Hayes bullish on Solana, deeming it as a Bitcoin alternative

Hayes views SOL as a highly volatile high-beta Bitcoin alternative, well-suited for short-term trading. If Bitcoin surges, SOL may experience larger gains due to its higher market volatility. Hayes noted that during the FTX crash, SOL dropped to around $7, while Ethereum was at around $1,200. Currently, Solana has surged to about $180, while Ethereum is around $2,600. Ethereum doubled, but Solana skyrocketed by 20 to 30 times, a significant increase.

Ethereum is slow, old, and boring, Vitalik only acts as an influencer to attract attention

Hayes also mentioned that Ethereum's price changes are slow and described Ethereum as "slow, old, and boring." He stated that even Vitalik tries to be an influencer on social media to attract attention to Ethereum because many find Ethereum unexciting. In contrast, Hayes believes that SOL's high market volatility, liquidity, active community, and good trading performance have attracted many investors, making it a recent market focus. Therefore, he thinks Solana is more attractive than Ethereum in the short term for seeking high returns.

Hayes added, "If Bitcoin breaks out, I won't buy Bitcoin but will buy Solana. This doesn't mean I will sell Ethereum, which I have held long-term, but currently, SOL is a better trading tool."

Focus on China's economic strategy rather than the U.S. election

Regarding China's current economic situation, Hayes mentioned that China is facing a similar housing market collapse issue as the U.S., Japan, and the EU. Historically, these countries have lowered interest rates close to zero, implemented quantitative easing, and allowed banks to lend heavily to government-supported industries when encountering such situations. Hayes predicted that China would employ similar methods to address its current economic challenges because letting overleveraged companies fail could lead to a loss of government support and trigger severe social unrest.

Hayes believes that although the market currently perceives China's response as insufficient, in the long run, China will likely continue printing money to stimulate the economy. This is beneficial for assets with limited supply like Bitcoin and gold, as they can better retain value amid global currency supply increases. In summary, Hayes stated that rather than focusing on the U.S. presidential election, it's more crucial to pay attention to China's monetary policy changes and their impact on the global market.

Focus on the Fed's stance on QT and QE, prepare for the upcoming bull market

Regarding the U.S. Federal Reserve's policies and the future market, Hayes believes that the Fed will eventually stop quantitative tightening (QT) and restart quantitative easing (QE) as the bank system's reserves are decreasing, leading to financial pressure. He pointed out that while many focus on interest rates, the real key lies in the Fed's stance on QT and QE, which significantly affects risk assets like Bitcoin and other cryptocurrencies.

Lastly, Hayes emphasized that regardless of the election outcome, the U.S.'s fiscal issues will persist, and the Fed will eventually return to money printing. For those holding long-term assets like Bitcoin and gold, which are limited-risk assets, this is positive news. He also advised investors not to overly fixate on short-term market fluctuations but to prepare for the upcoming bull market.

Arthur Hayes: "China's QE takes time, Bitcoin, fight on!"