Arthur Hayes: Where Bitcoin Goes Next

**Arthur Hayes** (0:00)
If I had $1 to invest right now, would I be putting it into Bitcoin? No, I would wait. I think that the longer that this conflict goes on, the higher the likelihood that the Fed has to print money to support the American war machine, and that's when I'm going to buy Bitcoin, when the central banks start printing money.

**Natalie Brunell** (0:22)
Hey, everyone, welcome back to the show. Joining me this week is the one and only Arthur Hayes. He is the Chief Investment Officer at Maelstrom, and obviously an OG. A lot of people know him, but this is the first time he's coming on Coin Stories. So Arthur, thanks so much for joining me.

**Arthur Hayes** (0:35)
Thanks for having me.

**Natalie Brunell** (0:37)
I feel like we have a lot to talk about, but where I kind of want to start is just, share your backstory because the folks in my audience have not heard from you before. You've got a fascinating backstory. I think I read that you grew up in Michigan, then you ended up working in the financial world. You started BitMEX, you were early to Bitcoin, but you've gone on a fascinating journey. So share what you want about it.

**Arthur Hayes** (0:59)
Sure. I was born in Buffalo, New York, and also I spent a lot of time growing up in Detroit, Michigan. And I decided to go to university at University of Pennsylvania, the undergraduate business school at Wharton in 2004 to 2008 And I caught the bug to want to go to China. And I studied Chinese in school as well as business. And I got the awesome opportunity in 2006 to go out to Hong Kong as a study abroad student. I loved it so much that I got a summer internship there at Deutsche Bank in Hong Kong, and finally was able to get a full-time job in Hong Kong in 2008 and moved out to Asia where I hadn't left. So I've spent half of my life between Hong Kong, Singapore, and other places in Asia. I never worked in the United States. I don't really spend much time there, even though I was born there. My Chinese sucks right now because unfortunately I use it too much, but it's great to at least try to learn some of it. And I worked in the financial services industry for five years, three years at Deutsche Bank. I was the head exchange traded fund market maker. So obviously everybody in your audience probably is very familiar with ETFs. When I got into the banking industry, it was a new thing for Asia. And I was the market maker for the Deutsche Bank X-Tracker wine in Hong Kong and Singapore. And then I left Deutsche and went to Citi, did the same job there. And then, you know, looking back in hindsight, the best thing that ever happened to me, I got fired in 2013 from Citi Bank. And I was like, okay, what do I want to do next? And I think at the time, I was very disillusioned with mainstream finance. Obviously, after 2008, people weren't making the same kind of money that they were back when I was in university. And so I thought, well, I don't see this industry having a secular, amazing future, at least for me and what I'm doing. So let me try to do something different. And I came across a post on ZeroHedge about Bitcoin. I was like, okay, well, I got a lot of time on my hands. Let me figure this Bitcoin thing out. I read the white paper. I was super into the philosophy behind it. I would say I don't have a tech background. I'm a trader. And I was like, okay, well, how do I trade this Bitcoin thing? And I went on all the forums and researched every single exchange that was out there at the time. How do you go long? How do you go short? Are there any derivatives? And I found this small derivatives exchange called IcyBit. It was run by two Russian guys in the Caribbean back in 2013
And there's an amazing arbitrage opportunity where you could sell one of their futures contracts by Bitcoin spot. And your per annum return was like 200%.
Oh, great. I did this. This is what I used to do at work all day long for like two basis points, but now I can do it for a lot more. And so I went on Mt. Gox, I bought my first Bitcoin, I sold some futures contracts, and then I, you know, looked at my spreadsheet a month later, and I made exactly the amount of Bitcoin that I thought I was going to make. I was like, wow, this is really cool. And so I started just doing that for a few months. And then in the fall, when the whole debacle with Mt. Gox started where you couldn't withdraw your dollars, like I tried to withdraw some dollars in my bank account, and it was taking weeks and weeks and weeks. I started going on the forums and people were talking about all the issues that they were having and I was like, oh, fuck, I think that they might actually might have a real issue. Thankfully, at the time, you could withdraw as much Bitcoin as you want from Mt. Gox. And back in the fall of 2013, the premium for Bitcoin in China was skyrocketing. So it was like 40, 50, 60% premium trading in China. So they're okay. Let me buy Bitcoin on Mt. Gox for these dollars that I can't withdraw. And then I'm going to send them to a Chinese exchange, sell them for Yuan, get on the bus, go to China, open a big account, withdraw my Yuan, get back on the bus, go back to Hong Kong. And I did that over and over and over again to arbitrage the difference between Bitcoin in China and in Hong Kong.