Trading the Merge | Arthur Hayes

Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, how to front run the opportunity. This is Ryan Shaw Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Guys, we have a special guest, a long sought-after guest here with us today on Bankless, Arthur Hayes. He's a crypto trader of traders. Now he is particularly bullish on the ETH trade. He's gonna tell us why. A few things to look out for during this episode. Number one, why is Arthur a trader anyway? How does he approach the market, the crypto market? We get inside his head. We ask these questions. Number two, why Arthur thinks fiat inflation is a near certainty? We talk energy, we talk debt, we talk demographics. Finally, we get to the ETH trade. That's number three. Arthur says it's the most obvious trade he's ever seen in crypto, and he's been here a lot of years. Is the merge priced in? That's the question we ask him. We also ask, what's more powerful? The merge or macro markets? He answers that question too. Finally, we get to why Arthur is still alive in crypto when so many other traders have gotten lost along the way Arthur has survived. What are the secrets to surviving in crypto as a trader? David, really fun episode. Arthur's just great to talk to. He has a, you know, incredible clarity of thought as well. And uh, you know, I love the way traders think. To me, they always seem like professional athletes at some level, where a lot of this is obviously data and science, but you know, some of this is just art and raw skill, the ability to navigate markets, kind of like a surfer catching waves.

Yeah, he's not a trader that looks at like lines on a chart, right? I don't think I've ever seen Arthur Hayes draw a line on the chart. He is strictly looking at more macro, more zoomed out influences. He's looking at the words of the central bank. He's looking at the fundamentals behind the Ethereum merge. And he's cross referencing all of these data points, which as a non trader, yet somebody who makes like content about these same subjects, I can actually like really understand.

Yeah.

Rather than be like, oh, that little like charty chart thing points this way. Like, no, that's not how Mr. Hayes thinks, no.

What's funny, I know we just set him up as a trader, right? And he definitely is a trader, right? But like also I find much more in common with him, maybe this is cause he's trading on kind of a month to years long cycle than a lot of the TA traders or even the narrative traders that I know in the space. Did you feel that too?

Yeah, no, I definitely felt that for sure.

It's like thesis driven trade.

Right. Thesis driven trading, which is like something I can really get behind of all of all kinds of trading out there. Arthur, of course, he was the CEO and co-founder of BitMEX, which was a derivatives exchange that was extremely popular back in the early days of my early days of crypto and even before I got in 2017 to 20 like 19. It had the vast majority, 90% of like all volume on like Bitcoin derivatives. There's a story there where BitMEX got into trouble for not doing KYC. That's not the story that we cover here on the podcast. We are strictly focused on Ether, the merge, macro markets, and just some other crypto stuff as well. So this is what we focus on here on the show.

Guys, if you want uh some of David and myself our thoughts after this episode, I got a lot of thoughts to talk about David with you.

Always two.

You gotta stick around for the debrief. Premium subs. You can get that now. You can access that now. And of course, that is where David and I unpack the episode that was it's our raw, unfiltered thoughts for the Bankless Nation. There'll be a link where you can go premium in the show notes. All right, let's get right to our conversation with Arthur.

Bankless Nation, we are super excited to introduce you to Arthur Hayes for the first time on Bankless. Arthur Hayes is a crypto OG. He's a trader through and through. Discovered Bitcoin in the early days, 2013 or so, co-founded BitMEX in 2014, became crypto's dominant derivative exchange. More recently, both David and myself have been binging on Arthur's content because he's become one of our favorite writers. He's got a lot to say about macro, a lot to say about crypto. And even more recently, the Ethereum merge, the ETH trade. That's what we're going to be talking about on Bankless today. Arthur, how are you doing?

Excellent. Thanks for having me.

Can I just like kick things off and ask you, so why are you writing so much? You seem to have a lot to say, and I'm wondering, because I know you're a trader, right? So there's got to be some sort of, you know, we could say it's altruism. Maybe there's a piece of it that's education altruism. But are there some other incentives at play here? Is this about kind of building a brand? Is this about you're just excited about a specific trade? You want to get the word out? I think somewhere you talked about how writing helped you clarify your thoughts too. Why are you writing so much?

So I think that that latter thing you said about clarifying my thoughts is probably

the most important thing for me, right? Because

I manage my own money. I really enjoy doing it. I think it's an intellectually stimulating exercise, especially when

you get to have opposing views to other people. And so you're discussing them.

Obviously, it's me versus many from my blog because it's not actually a two way conversation.

But obviously, people post comments on Twitter and other.

Social media platform and see here what people think about what I've written. But at the end of the day,

if while you're trying to put together a cogent argument that's going to be read by, you know, a few hundred thousand people across the world,

you don't want to sound stupid.

You want to make sure that your facts are correct. You want to make sure that your logic is correct.

You want to make sure that you're evaluating all the different ways in which you could be wrong,

such that you have confidence in what you think should happen in the future if you're right.

And I think if you approach it in that respect,

your trading decisions will become a lot better.

Because it's not just, okay, let me just go put this trade on and I'll find out, you know, in a minute, a half an hour, a year, or a month, whatever your time frame is, if I'm right or wrong,

I'm gonna put this trade on, then I'm gonna write about it.

And then

the whole world can see me for what I've done and critique it.

And I think that is in

it's scary in some respects, right? Because

you don't wanna have like miss some fundamental thing.

Somebody points it out to you in the first five seconds of reading your piece, you're like, fuck, I didn't think of that.

That like just completely invalidates everything I've been saying. I shouldn't have put that trade on. Let me go, you know, log back into my trading account and like reverse everything I just did. So that's exactly what you don't want to happen.

And I think by spending the time to write and to open yourself up to criticism by anyone with an internet connection,

you become a lot better thinker and

and I think a lot better investor.

By the way, have you ever written something where you did that where you got some feedback and you're like, Oh rewind.

Undo.

Maybe it's more internal, right? So I had an idea about, you know, maybe it's a particular subset of coins that I was bullish about. And I had a position on writing, and I was like, okay, let me write about this. This is why I like them.

And I start writing, and I'm like, hmm,

it doesn't really sound so good. And then maybe you start thinking about

that doesn't really fit with my overarching thesis. I think I got this wrong. And then

I'll go back and I'll just trade out of the whole thing.

I'll remove it from my essay.

And I'll be thankful that I actually went through that exercise because

no, maybe you could be right in a particular time frame, but

If you don't believe in your position,

and at least for me, I'm not trading on a very short time frame. So I tend to hold things for you know months, years,

because I can, and I have that luxury of doing so.

You have to be able to suffer, you know, like with this weekend once ether down like 30%, something like that. Something, you know,

pretty substantial. Right. You actually have to have conviction in your idea, a conviction in your future prognosis. And if you haven't spent hours

writing, at least in my respect.

Then how can you look at the market and say, okay, my mark to market is down 30, 40%, whatever it is, doesn't really matter.

But I not only believe in the trade, but maybe I'm gonna consider adding more to the trade because

I think this is a good buying opportunity.

And so I think if you