Fed Rate Cuts May Not Boost Bitcoin Prices – Arthur Hayes

Arthur Hayes, co-founder and former CEO of BitMEX, recently shared his perspective on why the upcoming interest rate cut by the US Federal Reserve may have a limited impact on the price of Bitcoin (BTC).

Hayes, who is currently chief investment officer at Maelstrom, commented on Federal Reserve Chairman Jerome Powell’s remarks at the Jackson Hole Symposium on Aug. 23. Despite Powell’s hints of a possible rate cut in September, the price of Bitcoin has trended downward since the speech.

Hayes offered an explanation for Bitcoin’s struggles, pointing to the role of reverse repos (RRRs), financial transactions in which securities are sold with an agreement to repurchase them later at a higher price.

He noted that RRRs currently offer an interest rate of 5.3 percent, which is higher than government bond yields, which currently stand at 4.38 percent.

This higher interest rate has led large money market funds to shift their cash from bonds into RRPs, reducing the amount of capital available in the market for riskier assets like cryptocurrencies, Hayes explained.