🚀 Should We Expect an Avalanche in Financial Markets? Arthur Hayes
posted 16 Oct 2024
Arthur Hayes, co-founder and former CEO of crypto exchange BitMEX, discussed a possible financial avalanche in his new article “Persistent Weak Layers.”
Hayes spent some time in October skiing and learning about avalanche science, finding symbolic parallels between avalanche dangers and financial market risks.
Talking about Persistent Weak Layers (PWLs), he explained that they are particularly dangerous because they can be buried deep within the snowpack. PWLs can be dormant for months until they meet a trigger, which can be a skier or more snowfall.
These layers can eventually cause deadly avalanches.
Hayes compared the post-WW2 geopolitical situation in the Middle East with a Persistent Weak Layer hidden behind the global order. He particularly mentioned the tension between Iran and Israel and how it will impact crypto.
As investors and traders, we are on a precarious yet exhilarating slope.Hayes wrote:
On one hand, China and other countries printing more money increases inflation, a situation beneficial for crypto investments. More people may turn to crypto, which will drive prices up.
But crypto markets may take a massive dump if Israel-Iran tension accelerates, Hayes says. In that case, the Persistent Weak Layer in financial markets will fail, causing an avalanche.Hayes said in this uncertainty he has a choice to sell fiat to buy crypto or, on the contrary, reduce his crypto holdings. As an investor, he doesn’t want to be underallocated in case of the next bull market but is also careful about possible capital loss in case the Bitcoin price falls.
Hayes added he’s not concerned about BTC much as it always goes up but is worried about some memecoins in his portfolio.
Talking about possible scenarios of the Israel/Iran conflict, Hayes said in small-case military actions the Persistent Weak Layer in financial layers will hold. However, it will fail if critical infrastructures are damaged, causing a financial avalanche.
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