Arthur Hayes, chief investment officer at Maelstrom, employs Ethena Labs’ USDe stablecoin to hedge against election-driven market swings, securing a 13% return on 5% of Maelstrom’s assets.
As the US election on November 5, 2024, approaches, financial markets brace for the potential upheaval of major political events. Arthur Hayes, chief investment officer at Maelstrom, a leading digital asset investment fund and co-founder of BitMEX, has adjusted the fund’s strategy to offset election risks while seizing growth opportunities in key cryptocurrencies.
Hayes employs Ethena Labs’ USDe USDe $1.00 24h volatility: 0.0% Market cap: $6.51 B Vol. 24h: $59.95 M stablecoin as a hedge against election-driven market swings. Maelstrom currently holds 5% of its assets in staked USDe, yielding an approximate 13% return. The fund also retains substantial long positions in Bitcoin, Ether, and other tokens, reinforcing its growth-oriented stance in the crypto sector.
“Given the uncertainty, Maelstrom has 5% of the fund in staked USDe (Ethena USD), earning roughly 13%. We maintain our large long positions in Bitcoin, Ether, and other tokens,” Hayes told CoinDesk.
Ethena’s USDe operates as a synthetic dollar, stabilized through a collateral-backed model that combines a hedged cash-and-carry arbitrage strategy to preserve its $1 value. This strategy generates returns by accumulating fees from shorting perpetual futures tied to Bitcoin and Ether. By staking USDe and acquiring its reward-bearing counterpart, sUSDe, investors gain access to additional protocol rewards.
Arthur Hayes’ Investment Strategy
Maelstrom’s investment in a delta-neutral product aims to shield the fund from major price swings as the election nears and until results are finalized on November 8. Hayes underscores that this approach protects the fund and prepares it to capitalize on post-election market shifts. If the election concludes peacefully, markets are expected to surge. Once the outcome is clear and widely accepted, all sUSDe will move into crypto.
Maelstrom, run by Hayes’s family office, focuses on building a portfolio of key infrastructure firms driving the next phase of decentralized finance. Besides managing these investments, Hayes offers industry insights through his widely-read monthly newsletter Crypto Trader Digest.
Hayes predicts that cryptocurrencies, viewed as high-risk assets, may see heightened volatility if election results trigger unrest. The tight race between Republican Donald Trump and Democrat Kamala Harris, with prediction platforms giving Trump a slight lead, adds another layer of uncertainty to market dynamics in the weeks ahead.
USDe Stablecoin Hedge
Bitcoin options on Deribit signal nearly 3.8% volatility for November 8, hinting at market jitters as the election approaches. Despite potential turbulence, Hayes holds a firm view on Bitcoin’s bullish trend, suggesting that the broader outlook remains strong regardless of election results. He argues that rising budget deficits continue to bolster Bitcoin’s role as a safe-haven asset akin to gold.
Both candidates plan significant fiscal actions, and Hayes predicts massive money printing in the trillions. He believes crypto will benefit over the medium term, regardless of the election winner. Trump’s approach leans toward tax cuts, deregulation, and economic stimulus without benefit reductions, which aligns with past practices.
“Both Trump and Harris will print money in the trillions of dollars. In the medium term, it doesn’t matter who wins. Crypto will do well. In the short term, the market understands the ways in which Trump will stimulate the economy,” Hayes explained.
Legendary trader Paul Tudor Jones supports this viewpoint, predicting inflation will persist regardless of electoral outcomes. This shared stance among prominent investors has sparked optimism across the crypto community, with many expecting Bitcoin to soar to $80,000 or more post-election.
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