Against the backdrop of a global macroeconomic environment full of uncertainties and market fluctuations caused by US policy direction, cryptocurrency investors are trying to clarify market bottom signals and future investment themes. The Rollup program invited Arthur Hayes, who has unique insights into macro trends, and Mike, the founder of EtherFi, who focuses on DeFi infrastructure and applications, to analyze the current situation together. They talked about the Federal Reserve's movements, the impact of Trump's policies, the competition between Bitcoin and Ethereum, the value of fundamental investment, and how EtherFi will build the next generation of DeFi applications, presenting the audience with an in-depth dialogue that combined macro perspectives and micro insights.
Ten key points
Market bottoming signals and easing expectations
Hayes believes the market has bottomed out at $74,500, citing factors including the Trump team's quick concessions on tariffs and strong signals from Federal Reserve officials (such as Boston Fed President and Treasury Undersecretary Bentsen) that they will do whatever it takes to ensure the normal functioning of the market. He reminded investors that they should not stick to the old script of "waiting for interest rate cuts or restarting quantitative easing (QE)", because the new liquidity injection method may be completely different, and if they miss the opportunity, Bitcoin may have risen to US$500,000.
New Liquidity: Treasury Bond Repo
The key at present is not traditional QE, but the US Treasury’s “Treasury Buybacks”. Although this is not directly equivalent to QE, it has a similar effect. It can provide more leverage to institutions that can purchase government bonds (especially hedge funds that engage in basis trading), allowing the Treasury Department to successfully issue trillions of dollars in new bonds and maintain market operations even as the deficit continues to rise.
The MOVE Index as a Thermometer for Policy Intervention
Hayes emphasized that the bond market volatility index (MOVE Index) is key to observing policy responses. Historical experience shows that when the MOVE index rises above about 140, policymakers will almost immediately take action to stabilize the market. As the leverage of the financial system continues to increase, this threshold for triggering intervention may become lower and lower. The unpredictability of Trump’s policies will increase market volatility, which is good for Bitcoin because authorities cannot afford the systemic risks that come with high volatility.
Bitcoin is expected to reach one million US dollars, and gold is also strengthening
Hayes reiterated his view that Bitcoin is heading towards $1 million, believing that the current rebound is only the starting point, analogous to the 6-fold increase that was initiated after the FTX collapse at the end of 2022 due to Yellen's reduction of reverse repurchases. He believes that gold and Bitcoin reflect the same phenomenon: distrust of the current fiat currency system and geopolitical risks (such as the US freezing Russian assets). It’s just that the buyer groups are different (central banks prefer gold, retail investors/global individuals prefer Bitcoin). He expects gold could reach $5,000 sooner than people think.
Bitcoin’s dominance may continue, with institutional funds taking the lead
Although Ethereum and other public chains also have positives, Hayes believes that Bitcoin Dominance may not have peaked in this cycle yet. The main reason is that traditional financial institutions, family offices and high net worth individuals, after realizing the necessity of holding non-correlated assets (such as Bitcoin and gold) to hedge the risks of system changes, their first stop is usually Bitcoin, and then the funds may spill over to other higher-risk crypto assets. Cantor Fitzgerald's strategy of mimicking MicroStrategy is a case in point.
Ethereum has bottomed out, with rich fundamentals
Mike, the founder of EtherFi, is relatively optimistic about Ethereum and believes that its price has bottomed out. Despite the previous negative market sentiment towards Ethereum, many exciting developments are happening at the protocol level (Layer 2 development) and application level (such as EtherFi, Restaking). He expects the ETH/BTC exchange rate to reverse, and strategies that imitate MicroStrategy's holding of ETH are also gradually emerging.
Definition of “fundamental reversion”
Cash Flow and Value Return: Mike defines “fundamentals season” as the period when the fundamentals of projects that have real users, generate actual cash flow and revenue, and return part of the value to token holders (for example, through token buybacks) begin to have a substantial impact on token prices. He believes that the market has been flooded with overvalued "air coins" in the past, but eventually "gravity" will take effect.
Value capture mechanism becomes popular, criticizing the Uniswap model:
Hayes echoed the fundamental view, emphasizing that what he looks for is:
(1) There are real users willing to pay to use their services (rather than just consuming token incentives)
(2) The protocol will return the profits generated to token holders through some mechanism (such as token repurchase, profit sharing). He cited BNB as an example and harshly criticized models like Uniswap that generate huge revenues but do not benefit token holders. He believes that this model of "project success but holders gain nothing" is outdated.
EtherFi's DeFi Bank Blueprint and Billion-Dollar Revenue Target
Mike elaborated on EtherFi’s goal: to become the first DeFi protocol to achieve $1 billion in annual revenue (from real services rather than speculation). They are building a "DeFi bank" that provides one-stop financial services including payment (through debit cards in cooperation with Visa/Mastercard), savings, lending, etc., with the advantages of on-chain, self-custody, lower fees, higher returns, and a friendly interface (hiding the complexity of the blockchain). Its charge card product has been highly praised by Hayes, who believes that it solves the pain points of high fees and poor experience of many crypto cards in the past. EtherFi is profitable and has been performing token buybacks since its early days.
Meme Coin’s Positioning and Asset Class Differentiation
Regarding Meme coin, Arthur Hayes believes that its value lies in "trading human cultural hotspots" and is not supported by actual cash flow. Mike likened it to a different "universe", like roulette in a casino, which is different in nature from fundamentals-based investments (such as poker or chess, which involve a higher proportion of skill). He expects that in the future the crypto market will gradually clearly classify tokens of different natures (such as platform coins, governance tokens, and Meme coins).
in conclusion
Arthur Hayes' conversation with Mike outlines a market outlook that is full of opportunities but also requires caution. Although macro-level liquidity expectations bring optimism, investors need to break away from the old framework, understand new types of policy tools (such as government bond repurchases) and their impact, and pay close attention to key indicators such as the MOVE index.
At the same time, as the market gradually matures, "fundamentals", namely real users, revenue and value feedback, are becoming the key to evaluating the potential of a project. Whether it is the macro narrative of Bitcoin or innovative DeFi projects like EtherFi that are deeply rooted in applications, they all indicate possible important development directions in the next stage of the crypto field. Investors should keep a flexible mindset and pay more attention to protocols that can create real value and share the results with holders.
Here is the full video:
