The Breakdown - Hayes: "Time to Long Everything!"

Episode Date: May 3, 2025

Arthur Hayes says it’s time to “long everything”—and in today’s episode, NLW digs into why. Broadcasting from Token 2049 in Dubai, Hayes makes a bold case for an upcoming liquidity wave that could supercharge markets. NLW breaks down Hayes’ forecast, the return of CZ to the public stage, and insights from BlackRock and Goldman on crypto’s next chapter. Then it’s a deep dive into troubling GDP numbers, the rising recession risk, and how the Fed may respond. Finally, we explore Bitcoin’s strategic reserve deadline, wirehouse ETF adoption, and the Treasury’s $2T stablecoin forecast. It’s a full macro + crypto briefing you won’t want to miss. Sponsored by: ⁠⁠⁠⁠⁠⁠Crypto Tax Calculator⁠⁠⁠⁠⁠⁠ Accurate Crypto Taxes. No Guesswork. Say goodbye to tax season headaches with Crypto Tax Calculator: Generate accurate, CPA-endorsed tax reports fully compliant with IRS rules. Seamlessly integrate with 3000+ wallets, exchanges, and on-chain platforms. Import reports directly into TurboTax or H&R Block, or securely share them with your accountant. Exclusive Offer: Use the code BW2025 to enjoy 30% off all paid plans. Don’t miss out - offer expires 15 April 2025! Ledger Ledger, the world leader in digital asset security, proudly sponsors The Breakdown podcast. Celebrating 10 years of protecting over 20% of the world’s crypto, Ledger ensures the security of your assets. For the best self-custody solution in the space, buy a LEDGER™ device and secure your crypto today. Buy now on ⁠⁠⁠⁠⁠⁠Ledger.com⁠⁠⁠⁠⁠⁠. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Thursday, May 1st, and Arthur Hayes, founder and former CEO of Bitmax, says that it's time to long everything. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link of the show notes. go to bit.ly slash breakdown pod. All right, friends, fun one to kick us off today. Like I said, we have Arthur Hayes today drop in a very quotable line as he has

want to do. And what we're going to do is give you his take on this and then kind of look through the rest of the news and see whether it all tracks for you. So the context for this is token 2049, which is underway in Dubai with a series of very high profile guests. In fact, we've got senior executives from BlackRock and Goldman Sachs getting their first taste of the crypto conference circuit. I'm so sorry, slash you're welcome. Now, their talks explained why their firms are betting on

crypto adoption and discussed what it would take for the industry to go to the next level. We also had CZ's largest appearance since he ended his stretch in federal prison. He touched on the need for utility and AI meme coins, the EU's sclerotic crypto adoption, and how freedom money doesn't mean a thing without free speech. As I said, though, the most interesting comments for my money came from Bitmex founder Arthur Hayes. Now, Hayes is a nimble thinker. He is constantly taking in new signals and outputting his latest sensibility about where things are. And for the past six months, he's been going back and forth, recognizing that there are structural bullish forces building, but not yet pulling the trigger on a big call. That all changed,

however, with his keynote speech, with Hayes declaring it's time to long everything. Hayes compared the current state of the market to the third quarter of 2022. He noted that there were a ton of reasons to be afraid of the market then, with the detonation of crypto firms reaching its conclusion in the Fed halfway through their hiking cycle. However, he pointed out that shortly afterwards, the Fed shifted gears and pushed $2.5 trillion in liquidity through their repo program, helping to put a bottom on crypto. Hayes' slide deck proclaimed, don't worry, Bitcoin is going to a million dollars by 2028. He pointed out that the Treasury printing money to fund the government through various buybacks and maturity transformations had boosted Bitcoin 6x between 2022 and now.

Hayes argued that, quote, Bitcoin can do similar or better numbers as the deficit widens. Now, if the negative GDP print that we're about to talk about is even directionally correct, and the economy is heading into recession, then deficit expansion is basically automatic as support programs kick in and tax revenue drops. Hayes is looking ahead and seeing expanded treasury issuance and Fed liquidity support on the horizon, which he views as various different forms of money printing. Other traders are starting to see the signs as well, with Jared Dillian tweeting, we're not going to cut the deficit, are we? The deficit is going to get bigger, isn't it? To which Lin-Alden responded, yep. So as I said, that's Hayes' call.

And clearly this is not about the immediate term. This is about a trajectory that he sees us on. But still, let's take a sample of the news from today to give you a sense to make up your own mind around where you think things are. We'll start with the thing that I just mentioned. The GDP has contracted, raising fears that the U.S. may already be in a recession. First quarter GDP numbers show a drop of 0.3%, falling far short of the expected 0.4% growth. This is the first quarter of negative growth since quarter one of 2022, when two consecutive negative quarters led to a technical recession. That year's contraction was very shallow, and strong labor market conditions led the NBER to decline officially labeling at a recession. The fourth quarter of

last year saw 2.4% growth, a significant drop from the pace set over the summer, but far from troubling. Of course, sudden drops in GDP are never good, but there is reason to think that this data might be noise rather than signal. Analysts note that the first quarter saw a rush of imports as retailers stocked up on goods ahead of the tariff announcement at the beginning of April. imports were up 41% for the quarter, the largest shifts since 1974 outside of the pandemic. Trade is a component of GDP, with exports adding to the total and imports subtracting from it. The logic is that every import gets sold into the economy and captured in GDP figures at that point. So imports are subtracted on the front end to ensure only the added value is recorded to the measure of domestic production.

This means that periods of stockpiling can cause a massive hit to GDP that are eventually balanced out once goods are sold. Nick Timrose of the Wall Street Journal noted that real final sales, which he said was a better measure of underlying demand, grew at a 3% annualized rate. This doesn't necessarily mean that the numbers should be ignored and that the economy is doing fine. Chris Repke, the chief economist at Forward Bonds, commented, maybe some of this negativity is due to a rush to bring in imports before the tariffs go up, but there is simply no way for policy advisors to sugarcoat this. Growth has simply vanished.

However, this also isn't a clear signal of a sudden stop recession, which would be the natural conclusion of GDP fell by almost three points into a contraction under any other circumstance. Unsurprisingly, much of the reporting around this is viewing it as Trump's first economic scorecard and as such giving it a failing grade. The president posted, this has nothing to do with tariffs only that Biden left us with bad numbers, but when the boom begins again, it will be like no other. Be patient. Democrats have been quick to label a single quarter of slightly negative growth of recession, with New York Representative Richie Torres tweeting,

it's official, Donald Trump has finally liberated the American economy from growth, make recessions great again. In truth, neither partisan framing seems particularly accurate based solely on GDP figures. Big shocker there, I know. Digging down, though, additional data below the headline does give a little more reason for concern. Consumer spending growth slowed to 1.8%, the slowest pace since mid-2023. Robert Frick, an economist at Navy Credit Union, said, the more telling number for the future of the expansion was consumer spending, and it grew, but at a relatively weak pace. That's concerning, but not alarming, as it could have been due to bad weather and a spending surge at the end of last year. The Joltz report, which measures job openings and layoffs, showed a big drop in

advertised positions well below the forecast. This tends to be a leading indicator for labor market conditions and is one of the data points that Fed Chair Powell is constantly referencing in speeches. March inflation numbers showed a big moderation with headline CPI inflation falling to 2.4% from 2.7% in February. Core inflation, which excludes food and energy, was running at 2.8%, with a slight increase on the monthly time frame. Still annualized core inflation remained flat at slowest pace since March 2021. All in all, this is a noisy set of data, and the entire picture is expected to be blown up in April and May as tariff adjustments hit the economy. Markets are still pricing in just a 5% chance of rate cuts at next month's Fed meeting. However, odds of the first cut

arriving over the summer are surging, and four rate cuts are now fully priced in for the year. The Fed will be tasked with weighing tariff-induced inflation against evolving signs of an economic slowdown in deciding when to begin cutting. Kullen Roche, the CIO of Discipline funds, tweeted, Fed will choose to ignore most of this data, in my opinion. It's all too noisy, but softening demand and softening labor market override any short-term inflation bumps from tariffs and marginally increases odds of more rate cuts later this year. Dr. Carol Kretov, senior automation expert at Coin Panel said, layer in the supplies negative GDP print and President Trump's escalating pressure on the Fed towards easier policy, and the doveish shift looks even more likely. With tariff risks easing in

some areas and Bitcoin liquidity still thin, even modest inflows could send Bitcoin sharply higher. It's a market primed for upside, but also hypersensitive to macro shifts. Today's episode is brought to you by Crypto Tax Calculator. If you're looking for accurate crypto taxes with no guesswork, check out Crypto Tax Calculator. Get accurate CPA-endorsed tax reports with full support for IRS rules. For those who have fallen down the on-chain rabbit hole, CTC has you covered with more than 3,000 integrations. They have full support for Defi staking and NFTs.

Import directly to TurboTax or H&R block or share securely. with your accountant. Create an account, import your sources, and review. It's that easy. Hello, friends. I am thrilled to share that Ledger is once again partnering and sponsoring with the breakdown. Many of you know, but for those of you who don't, Ledger is the most secure hardware wallet for your crypto and logins. It's trusted by 7 million users and secures 20% of the world's digital assets. What's more, Ledger is a lot more than wallets. Over the recent years, they've built a comprehensive ecosystem of products and services, all of which are designed to make digital ownership more secure and accessible. You can buy your Bitcoin with Ledger and Ledger Live and so

much more. Basically, not only did they want to keep your assets secure, they want you to be able to do more with them. Ledger's newest devices, the Ledger Stacks and Ledger Flex introduced the world's first secure touchscreens, making it easier and safer to manage your transactions and assets. Alongside Ledger stacks and Ledger Flex, the company also launched the Ledger Security Key app, offering a safer alternative to traditional passwords and enhancing your digital security. If you are in this space, you owe it to yourself to at least check out Ledger and their ecosystem what they have available to you. So thanks, once again, to Ledger for sponsoring the show. Another looming catalyst for Bitcoin over the summer is the deadline for the Bitcoin's

Strategic Reserve plans. It seems like an eon ago, but when President Trump signed the executive order setting up the reserve in early March, he tasked Secretary's Besson and Lutnik with developing budget-neutral strategies to acquire more Bitcoin. This wasn't really viewed as a major part of the policy at the time, and the barrage of tariffs news has pushed it farther back in the minds and market participants. But K-33 Research believes the report set to arrive at the beginning of May could be a major catalyst. Analysts wrote, Official communication ahead of this deadline has been very limited,

with little discussion of the matter among the public. However, we expect this to change as the date approaches. We are not aware of any concrete details on budget-neutral acquisition methods, and no public announcement on the progress of the SBR is currently scheduled. Nonetheless, given the rapidly approaching deadline, we expect discussions on the matter to progress into public discourse shortly, which could further solidify the promising momentum in Bitcoin of late. Now, at this point, the Treasury and Commerce departments have had their hands full dealing with the

tariff rollout, meaning that the Bitcoin Reserve policy could be deprioritized. Then again, that reasonable assumption could allow an actual plan to acquire Bitcoin to arrive as a huge upside surprise in May. K33 also noted that last week's rally didn't show up as a massive risk-on event in Bitcoin markets. Weekly funding rates for Binance's futures markets are negative for the first time since September, meaning that traders are paying to hold short positions. Analysts wrote, sustained negative funding is rare, with only four occurrences since January, January 2023, typically during high uncertainty. Current rates have remained negative for 97 consecutive

trading days, the longest such streak since the 2022 bear market. Historically, these environments have preceded strong rallies, particularly post-January 23. In fact, Bitcoin weekly volatility reached a 563-day low yesterday, dating back to October 2023. BitFinex researchers noted that deposits into crypto exchanges have seen a meaningful decline, adding, the divergence between price stability and shrinking exchange balances is critical, especially in a week following a big options expiry, and heightened macro volatility. On the institutional side, Bitwise CIO Matt Hogan is pointing to a big unlock of institutional interest as the major wirehouses add Bitcoin to their menu.

In a note to clients on Wednesday, Hogan said that he expects Merrill Lynch, Morgan Stanley, Wells Fargo, and UBS to be fully open for business by the end of the year. These wirehouses control 10 trillion in client assets through their network of investment advisors. And to be honest, their adoption of Bitcoin has been a little stunted compared to expectations. Hogan initially thought that wirehouse support for the Bitcoin ETFs would be added in the first half of last year, mirroring comments from Bloomberg's Eric Balcunis. Those estimates were based on the typical delay for doing due diligence on new ETF products. Apparently, and perhaps unsurprisingly, Bitcoin is a special case, and none of the major

wirehouses are fully online at this stage. Morgan Stanley did allow wealth advisors to pitch a Bitcoin allocation to their clients in August, but this was limited to large clients with more than 1.5 million in taxable accounts only. Hogan wrote, by and large, these platforms have not allowed their advisors to easily access Bitcoin ETFs, but that's changing fast. The information suggests potentially the biggest wave of capital to come into the ETFs is still ahead of us, and that was always the biggest catalyst in Hogan's mind, not the hedge funds and sovereign wealth funds, but rather the tectonic shift as a percentage point or two of every managed investment and retirement account in the country

moves into Bitcoin. Zuming out again to big structural forces, the U.S. Treasury believes that the stablecoin market could massively increase in the coming years. Over the past few quarters, the Treasury Borrowing Advisory Committee has been paying closer attention to stablecoins, with the topic showing up as a small section in their quarterly funding reports. For example, in the December report, the Treasury said that the crypto industry promised to create, quote, new financial market infrastructure, and stablecoins could increase demand for U.S. Treasury bills. This report goes even further, putting some numbers around the expected growth of the stable coin market. The Treasury wrote,

Evolving market dynamics has the potential to accelerate stablecoin's trajectory to reach $2 trillion in market cap by 2028. They also noted that the emergence of, quote, tokenized money market funds has recently created an alternative option to stable coins, primarily given their yield-bearing nature. Indeed, as stable coin legislation gets closer, the Treasury is starting to model demand from stable coin reserves. And this isn't a future phenomenon that the Treasury is banking on to solve financing issues. The department is claiming it could already be having an effect. They wrote, because most stablecoin colloquy, Lateral reportedly consists of either treasury bills or treasury-backed-re purchase agreements,

the growth in stablecoins has likely resulted in a modest increase in demand for short-dated treasuries. Speaking of stablecoins, Tether does now plan to launch a U.S. domiciled stable coin as soon as this year. In an interview with CNBC, Tether CEO, Paulo Arduino, confirmed plans to expand to the domestic market by the end of this year or early next year. He explained that Tether is working on cleaning up their image with U.S. regulators by working directly with law enforcement and highlighting Tether's benefit for the U.S.

economy. Paulo said, we're just exporters of what we believe to be the best product the United States ever created, that is, the U.S. dollar. And there is a ton more that we could get into. There's a Visa Bridge partnership to offer stablecoin funded cards. BlackRock is filing to offer digital shares of $150 billion treasury trust. Coinbase has increased the size limit on their Bitcoin loans after huge demand. And so when you take it all together, you have both structural forces on the one hand that seem like they might push us to accommodative monetary and fiscal policy. And on the other hand, all of this big institutional Bitcoin and stablecoin infrastructure being built all around us at the same time. So who knows? It's a little early for me to get fully on board with the long everything call, but it's not as crazy as it might seem at first.

For now, that's going to do it for today's breakdown. Appreciate you listening as always. And until next time, be safe and take care of each other. Peace.