Arthur Hayes Hedges Election Risk with USDe Stablecoin Strategy

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As a seasoned researcher and investor with a decade-long tenure in the crypto world, I find Arthur Hayes’ investment strategy intriguing and well-timed for the approaching US election of 2024. Having navigated market turbulence in my career, I can appreciate the prudent decision to hedge against potential election-driven swings by investing in a stablecoin like Ethena Labs’ USDe.

As the U.S. presidential election in November 2024 nears, financial markets prepare for possible turbulence caused by significant political occurrences. Arthur Hayes, head of investment at Maelstrom – a prominent digital asset investment firm and co-founder of BitMEX, has adapted the fund’s approach to manage election risks while capitalizing on growth prospects in crucial cryptocurrencies.

Hayes utilizes Ethena Labs’ USDe stablecoin as a protective measure against fluctuations caused by election events. Currently, Maelstrom allocates 5% of its assets towards staked USDe, which generates approximately a 13% return. The fund maintains significant long-term investments in Bitcoin, Ether, and other digital tokens, underscoring its commitment to growth within the cryptocurrency market.

Maelstrom holds about 5% of its funds as stakes in USDe (Ethena USD) and earns around 13% from this investment. Meanwhile, we continue to hold substantial long positions in Bitcoin, Ether, and other cryptocurrencies,” Hayes explained to CoinDesk.

Ethena’s USDe functions as a digital equivalent of the U.S. dollar, maintaining its $1 value through a collateral-based system that employs a hedged cash-and-carry approach. This method aims to safeguard its value by earning profits from shorting futures contracts linked to Bitcoin and Ether. By pledging USDe and obtaining sUSDe – the interest-yielding version, investors can participate in extra protocol incentives.

Arthur Hayes’ Investment Strategy

As a crypto investor, I’m strategically choosing to invest in a delta-neutral product to safeguard my fund from significant market fluctuations leading up to and following the election on November 8th. This strategy ensures that my fund remains protected and is ready to seize opportunities presented by post-election market shifts. If the election proceeds smoothly, there’s anticipation of a bullish market trend. Once the election results are clear and universally accepted, I plan to move all my sUSDe into cryptocurrencies.

Maelstrom, operated by Hayes’s private investment firm, concentrates on constructing an investment portfolio centered around crucial infrastructure companies spearheading the upcoming era of decentralized finance. In addition to handling these investments, Hayes shares expert knowledge through his popular monthly newsletter titled “Crypto Trader Digest.

It’s anticipated by Hayes that cryptocurrencies, considered as high-risk investments, could experience increased volatility if the election results spark unrest. The tight contest between Donald Trump and Kamala Harris, where prediction tools slightly favor Trump, brings an additional layer of unpredictability to market movements in the upcoming weeks.

USDe Stablecoin Hedge

Deribit’s Bitcoin options suggest a 3.8% volatility for November 8, indicating apprehension in the market as the election draws near. However, despite the anticipated choppiness, Hayes remains optimistic about Bitcoin’s uptrend, implying that the overall perspective stays robust, irrespective of the election outcome. He posits that the increasing budget deficits serve to enhance Bitcoin’s status as a safe-haven asset, similar to gold.

Both candidates plan significant fiscal actions, and Hayes predicts massive money printing in the trillions. He believes crypto will benefit over the medium term, regardless of the election winner. Trump’s approach leans toward tax cuts, deregulation, and economic stimulus without benefit reductions, which aligns with past practices.

Hayes stated that, in essence, both Trump and Harris are planning to print vast amounts of money, roughly in the trillions. Over a mid-term perspective, it doesn’t make much difference who gets elected because either way, the crypto market is expected to thrive. In the near future, the market has already started to grasp how Trump will boost the economy.

Notable investor Paul Tudor Jones holds this belief that inflation will endure, irrespective of election results. His viewpoint mirrors that of other influential financiers, creating a sense of anticipation in the crypto sector, as many believe Bitcoin’s value could climb to $80,000 or even higher following the election.

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2024-10-28 15:30