Arthur Hayes Predicts a 99% Drop for Monad, Labels It a 'High FDV, Low-Float VC Coin'

Arthur Hayes, co-founder of BitMEX, has expressed concerns about Monad's sustainability after its successful initial coin offering (ICO) that raised $269 million. He predicts that the token MON could plummet by 99%, calling it a "high FDV, low-float VC coin." Despite Monad's innovative technology, Hayes emphasizes the issue lies in its tokenomics. Whale investors are already feeling the impact as MON's value declines.

Key Takeaways

Arthur Hayes warns that Monad (MON) may experience a 99% price drop.
The success of its ICO does not guarantee long-term performance.
Hayes criticizes Monad's tokenomics rather than its technology.
Whales are facing financial losses as MON falls below its launch price.
The overall sentiment remains bearish, raising concerns for retail investors.

Hayes warns of Monad's 99% drop, calls it a 'high FDV, low-float VC coin'

Monad's ICO Success and Market Concerns

Monad has recently gained attention in the cryptocurrency market, achieving a record-breaking $269 million during its Coinbase initial coin offering (ICO). However, speculation regarding its long-term sustainability has intensified, as indicated by a 24% decline in price shortly after the ICO.

Hayes: MON Could Reach Zero

In a recent interview with Altcoin Daily, Arthur Hayes, who is also the Chief Investment Officer at Maelstrom, shared his view that nearly all Layer 1 tokens will trend toward zero, with Bitcoin [BTC], Solana [SOL], and Ethereum [ETH] as exceptions. He pointed out that even though Monad's ICO was successful, it does not ensure that the token will maintain its value over the long term, stating that it could potentially become "another bearish chain."

Hayes specifically highlighted that MON might drop by as much as 99%, referring to it as “another high FDV, low-float VC coin.” He suggested that insiders may overvalue and tightly control the token, likely selling it once the locked tokens are made available. According to Hayes, the initial surge in token value is often not sustainable over time. He noted that many projects are merely trying to replicate the success of Ethereum from 2014, and he recently announced a decision to close his position on November 25th.

Technology vs. Tokenomics

In response to Hayes' assertions, Monad co-founder Keone Hon defended the project, asserting that Monad has developed some of the most advanced technologies available in the crypto space. However, Hayes remained firm in his criticism, stating that the real issue lies not in the technology but in the tokenomics. He underscored that maintaining price levels with approximately 1% monthly inflation driven by staking rewards is crucial.

Hayes insisted that actual usage must boost MON's value, especially as token unlocks become more frequent. He also called on Monad to unlock all of its tokens to facilitate real price discovery under more favorable market conditions. Interestingly, members of the crypto community noted that Maelstrom itself holds several projects with locked tokens, suggesting a potential conflict of interest in Hayes' position.

Pressure on Whales

Whales are now under considerable stress as MON's price continues to decline. It recently fell below its initial price of $0.0288, as reported by the Coinbase chart. This decline has triggered a wave of liquidations, with two whale investors, who were previously in profit, reportedly losing a combined $3.23 million over the past 24 hours on Hyperliquid.

Whales liquidation
Source: Onchainlens
Given that whales possess a significant share of market liquidity, their losses indicate a persistent bearish sentiment that could lead to further drops in MON's price, leaving retail investors vulnerable to the fallout.

Final Thoughts

Arthur Hayes' warning regarding Monad's potential decline raises important questions about the sustainability of newly launched tokens, even those that begin with an impressive ICO. As market conditions evolve, the focus will need to shift toward the robustness of tokenomics as much as the technology itself.