Arthur Hayes Warns Monad Could Crash Heavily

Arthur Hayes has expressed concerns regarding Monad, stating that this recently introduced layer-1 blockchain might face a staggering 99% decline, indicating it’s merely another overhyped project by venture capitalists without true consumer traction.

In an interview on Altcoin Daily, the former head of BitMEX characterized the project as “another high FDV, low-float VC coin,” suggesting its tokenomics expose retail investors to significant risks. FDV, which stands for Fully Diluted Value, refers to a project’s total market value if all its tokens were circulated.

Hayes explained that projects with a considerable discrepancy between FDV and the circulating supply typically face initial price spikes, only to see steep declines when early investor tokens unlock. “It’s going to be another bear chain,” he added, stressing that while new coins often see initial interest, it doesn’t assure them a lasting future.

He noted that most layer-1 networks ultimately fail, with a few likely to become long-term players. Hayes mentioned that only Bitcoin, Ether, Solana, and Zcash are among those he expects to sustain their relevance in future market cycles.

Last year, Monad secured $225 million in funding from Paradigm, a venture capital firm. The layer-1 blockchain officially launched its operations recently, coinciding with an airdrop of its MON token.

Monad’s MON token up 40% since launch. Source: CoinMarketCap

Hayes Maintains Optimism for Crypto’s Future

Furthermore, Hayes articulated a positive perspective on cryptocurrencies overall, driven by anticipated government monetary expansions. He believes that the U.S. is primed for a fresh wave of liquidity injections in the lead-up to elections amid a slowdown in growth.

“I believe we are nearing the end of the beginning of this cycle, and significant bullish spending is on the horizon,” he posited.

Hayes also dismissed the traditional four-year Bitcoin cycle, arguing that earlier market surges were influenced more by global credit expansion from the U.S. and China rather than halving events. He stated that Bitcoin is the “last free-market smoke alarm” responding first when liquidity begins to dwindle.

Privacy Coins May Lead the Next Crypto Trend

Looking into the future, Hayes anticipates that privacy technologies will take center stage in the crypto narrative, expecting heightened interest in zero-knowledge systems and privacy coins. He suggested institutional adoption is likely to coalesce around Ethereum, particularly through stablecoins and tokenized finance.

Earlier this month, he disclosed that Zcash has emerged as the second-largest holding in his family office, Maelstrom, right behind Bitcoin.