Here’s How to Spot the Next 20X Crypto Asset, According to BitMEX Founder Arthur Hayes

BitMEX founder Arthur Hayes lays out his method for selecting the altcoins that could bust the most in the next crypto cycle.

In a new interview with Real Vision, Hayes says he scours the market for projects that seem to have enough acceptance and credibility to survive over the long term.

“I suspect you’re using the survivorship bias. If I look at an asset with the highest market cap of 20 and it’s down 95%, will it survive the next cycle? Will it survive the next two years? How much money have you raised? If the answer is yes, buy it.

In the worst case, it goes to zero. At best, it’s about 10x or 20x up. If it goes from 100 to one and it goes from one to 10, it’s a 10x. It’s still not nearly the same as it was, but I’m just playing the rebound.

So you know that as crypto rallies as the next cycle begins, whatever has fallen the most will rise the most just by the path dependency of how returns work. And so I guess that doesn’t change in most of these things. Most of them will fail, you don’t care. It’s really just a numbers game.”

Whether the current market has fallen as low as it gets, Hayes says, is impossible to know for sure.

But he believes the market is nearing a bottom and the primary question now is how long prices will stay at the lows.

“I think we’re picking at the ground. Are we holding $17,000 or $18,000 in Bitcoin? Maybe, maybe not. Do we think it will go much lower if it breaks? Probably not.

My whole thought is – who is physically selling? We had a classic credit crunch, like any other asset class. It could be Asia 1998. It could have been Mexico 1994. It could have been an Argentina. It’s all the same. Similar behavior, the tide receded, everyone went bankrupt, and you have forced sales…

And then you think about who went bankrupt? The biggest, most revered hedge funds and start-up figures have all come out and said they’ve been struggling financially. So the only people I think could sell at scale are the miners. And then you have to wonder – when they had to sell in size in mid-June, when the price was even lower than it is today, when people were taking out credit and no one could get credit. Now things have stabilized a bit, who’s screwed and who’s not?

So I think I’m trying to think of a cohort that didn’t have to sell a month and a half ago, two months ago, that has to sell now because we’re back to the same level. And I just don’t see that intensity, which makes me think we’re just banging on the ground. We might not be here for a while, we might be here for a while. That doesn’t mean we’ll be moving up any time soon.”

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