Here’s how to find the next 20X cryptocurrency, according to BitMEX founder Arthur Hayes
BitMEX founder Arthur Hayes lays out his methodology for choosing which altcoins can make the most in the next crypto cycle.
In a new interview with Real Vision, Hayes says he looks for projects that seem to have enough adoption and credibility to survive in the long run.
“I guess you’re using survivorship bias. If I look at a top 20 market capitalization asset and it’s down 95%, will it survive the next cycle? Will it survive the next two years? How much money did they raise? If the answer is yes, buy it.
In the worst case, it goes down to zero. Best case, goes up by 10x or 20x. If it went from 100 to one and it goes from one to 10, that’s a 10x. Still nowhere near where it was, but I’m just playing the return.
So you know that on the return of crypto, when the next cycle begins, everything that fell the most will rise the most just because of the path dependence of how returns work. So I guess this doesn’t change in most of these things. Most of them will fail, you don’t really care. It’s really just a numbers game.“
As for whether the current market has fallen as low as it will go, Hayes says it’s impossible to know for sure.
But he believes the market is near a bottom, and the primary question now is how long prices will stay at the lowest levels.
“I think we’re hitting the bottom. Do we have $17,000 or $18,000 in Bitcoin? Maybe, maybe not. Do we think it goes much lower than that if it breaks? Probably not.
My whole thinking is – who sells physically? We had a classic credit crunch, just like every other asset class. It could have been an Asia 1998. It could have been a Mexico in 1994. It could have been an Argentina. It is the same. Similar behavior, the tide went out, everyone went bankrupt, and you have the power to sell …
And then you think who has gone bankrupt? The biggest, most respected hedge funds, startups personalities have all come forward and said they had some financial difficulties. So the only ones left that I think can sell in size are the miners. And then you have to wonder – when they’ve had to sell in size in mid-June, when prices are even lower than they are today, when people pulled credit, and nobody could get credit. Now things have stabilized a bit, who is fucked and who isn’t?
So my view is that I’m trying to think of a cohort that didn’t need to sell a month and a half ago, two months ago, that now needs to sell today because we’re back at the same level. And I just don’t see that intensity, which makes me think we’re just scraping around the bottom. We may not be here for a while, we may be here for a while. That doesn’t mean we’re going up anytime soon.”
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Featured image: Shutterstock/Natalia Siiatovskaia/KDdesignphoto
