Arthur Hayes, CIO at the early-stage investment fund Maelstrom, is renowned for his strategic emphasis on long-term investments within the crypto infrastructure development sector, in contrast to a narrow pursuit of immediate gains.
Embarking on his journey as a trader in the asian market
Hayes commenced his financial journey in the Asian markets, diverging from the Wall Street norm, and embarked on a career as a trader. Holding a bachelor's degree in Economics and Finance from the Wharton School at the University of Pennsylvania, Hayes chose an unconventional route by opting to join Deutsche Bank in Hong Kong in 2007, while his contemporaries pursued roles on Wall Street in Manhattan.
In his tenure as an intern at Deutsche Bank, Hayes went beyond his assigned tasks, attempting to turn the routine of delivering meals to his superiors into a profitable endeavor. Reflecting on that time, he recalled, "I charged a pretty hefty spread on every order such that I made a few hundred dollars per week profit. Lest you think I acted out of line, everyone on the desk knew what I was doing, and tacitly approved. Game respects game."
Post his involvement in the banking sector, he uncovered a fresh avenue in Bitcoin arbitrage trading subsequent to his departure from Citigroup in 2013. He sought fresh opportunities in Bitcoin arbitrage trading after being dismissed from Citi group in the spring of 2013. During that year, as China imposed strict capital controls, causing Bitcoin prices to surge compared to Hong Kong, Hayes capitalized on this by executing arbitrage trades. He purchased Bitcoin at lower prices in Hong Kong and sold them at higher prices in China.
BitMEX revolutionizes crypto market liquidity
Armed with his expertise in futures contract trading, honed during stints at Deutsche Bank and Citigroup, he wielded the capacity to introduce an innovative business framework. With the ambition of infusing Wall Street-style trading into the Bitcoin domain, he conceptualized a futures exchange tailored for those eyeing leveraged Bitcoin trading. Collaborating with colleagues Ben Delo and Sam Reed, BitMEX was birthed in 2014, a moniker derived from "Bitcoin Mercantile Exchange," drawing inspiration from the illustrious derivatives market, the Chicago Mercantile Exchange.
BitMEX's inaugural half-year bore witness to a scarcity of traders on its platform. Hayes propelled BitMEX's leverage ceiling to an audacious 50x, over twice that of rivals, and in response, elevated it further to an unprecedented 100x. The outcome was the swift evolution of BitMEX into the favored destination for the most daring participants in the crypto industry. In a subsequent move, in May 2016, BitMEX extended its repertoire by unveiling perpetual futures swaps, enabling even neophyte individual traders to speculate on Bitcoin's future price trends within the derivative market. This pivotal maneuver orchestrated a transformative shift in the liquidity of the crypto market.
Founded Maelstrom, an investment fund with a long-term perspective
In 2022, Arthur founded the long-term investment fund known as Maelstrom. He underlined the concept of strategic patience, citing examples like Compound, Aave, and Uniswap, all founded in 2017 but remaining inconspicuous until the rise of DeFi in the summer of 2020.
Similarly, he predicts that the turning points for the projects he is currently investing in won't manifest immediately but around 2024. From that juncture, the market will begin questioning whether these projects have fulfilled their promises, actualized products, secured customer bases, and demonstrated functional technology. Drawing parallels with the wave of capital that flowed into clone projects of Uniswap, Compound and Aave during the bull market of 2020-2021, Hayes anticipates a similar trend of investors flocking to clone projects during the current downturn. In this context, he emphasized, "In this part of the cycle, it's important to make money but also to have done the work during the bear market to identify which companies are genuinely valuable and which are just imitations.”