Arthur Hayes says the Fed’s rate cuts have short-term benefits.

BitMEX co-founder Arthur Hayes recently published an article titled “Sugar High” outlining the short-term effects of a possible Federal Reserve interest rate cut.

Hayes emphasized that assets like bitcoin would benefit from liquid global financial markets that could come from inflation.

The Japanese yen could disrupt US financial markets.

In the year In a keynote address on August 23, Fed Chairman Jerome Powell hinted at a September interest rate cut, citing a major cooling in the labor market “from an already overheated one.”

The move is often seen as good news for consumers, easing borrowing and spending and lowering interest rates on credit cards and car loans. The Fed aims to stave off recession and stimulate the economy and employment through moderate cuts. Remember that US Senator Elizabeth Warren once called for lower interest rates because Americans were finding it difficult to pay their rent.

Hayes argued that leaning toward rate cuts would only have short-term benefits, just as sugar-laden foods provide a short-term energy boost. The crypto enthusiast has called for a rate hike because of long-term gains in economic performance.

Before the famine came, the feds had reached a peak in sugar levels. From an economic perspective, the Fed should scale, not scale,” he wrote.

Hayes also highlighted how Powell's announcement on Friday affected the Japanese yen. A reduction in interest rates would reduce the interest rate differential between the US dollar and the yen, thereby stimulating the appreciation of the latter. The co-founder of BitMEX warned that the rise of the yen could put pressure on global markets, especially dollar-denominated assets, which could lead to market turmoil.

Impact on Crypto Assets

While Hayes favors rate hikes, interest rate cuts could send crypto assets like Bitcoin to dramatic highs as Americans have more money to spend.

However, the crypto supporter expressed hope that the liquid environment in the global financial markets could lead to gains for Bitcoin and other cryptocurrencies.