BitMEX co-founder Arthur Hayes recently published an article titled 'Sugar High,' discussing the short-term effects of the Federal Reserve's potential interest rate cut.
Impact on US Financial Market
On August 23, Fed Chair Jerome Powell hinted at an interest rate cut in September, citing a considerable cooling off in the labor market. This move is often considered good news for consumers as it reduces interest rates on mortgages, credit cards, and car loans, easing borrowing and spending. US Senator Elizabeth Warren has also previously called for a rate cut as it made it difficult for Americans to pay rent.
Impact on Crypto Assets
Although Hayes advocates for a rate hike, an interest rate cut could send crypto assets like Bitcoin to incredible heights as Americans have more money to spend. Nonetheless, the crypto proponent expressed optimism that a liquid environment in the global financial market could profit Bitcoin and other cryptocurrencies.
Arthur Hayes' Commentary
Hayes also highlighted how Powell’s announcement affected the Japanese yen. Cutting the interest rate decreases the interest rate gap between the US dollar and the yen, leading to the latter’s appreciation. The BitMEX co-founder warned that the yen increase could pressure global markets, especially dollar-denominated assets, potentially causing market turmoil.
Arthur Hayes believes that the Fed's interest rate cut will bring short-term benefits but also warns about potential long-term consequences for the global economy and crypto market.
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