Arthur Hayes Cautions Monad Could Plunge 99%, Labels It as a High-Risk ‘VC Coin’

Summary: Arthur Hayes, the former chief of BitMEX, has raised concerns about Monad, a newly launched layer-1 blockchain, warning that its value might decrease by as much as 99%. He argues that Monad exemplifies a venture capital-driven project lacking real market adoption. Hayes maintains a generally positive view of the broader cryptocurrency market, anticipating renewed monetary expansion and a shift toward privacy technologies.

Key Takeaways

Arthur Hayes warns that Monad, a layer-1 blockchain, could experience a 99% crash due to its high fully diluted value (FDV) and low circulating supply.
He suggests that many new layer-1 networks, like Monad, are likely to fail, while only a few, including Bitcoin, Ethereum, and Solana, are expected to remain relevant.
Hayes believes the overall crypto market will benefit from increased liquidity from governments, particularly the U.S.
He predicts a growing emphasis on privacy technologies and privacy coins in the upcoming crypto narrative.

Arthur Hayes warns Monad could crash 99%, calls it high-risk ‘VC coin’

Hayes Issues Stark Warning on Monad

Veteran crypto figure Arthur Hayes has sounded the alarm about Monad, a recently launched layer-1 blockchain, stating it could potentially fall by 99%. He believes it represents yet another example of a project fueled primarily by venture capital excitement rather than genuine market demand.

In an interview with Altcoin Daily, Hayes referred to Monad as “another high FDV, low-float VC coin,” emphasizing that its token structure poses significant risks for retail investors. Fully Diluted Value (FDV) refers to the market value of a cryptocurrency project assuming all its tokens are currently in circulation.

Hayes notes that projects with a significant difference between FDV and their circulating supply typically experience initial price surges, followed by severe sell-offs when insider tokens are released. “It’s going to be another bear chain,” he stated, cautioning that while new cryptocurrencies often see an initial price increase, this does not ensure they will develop into long-lasting applications.

He mentioned that most new layer-1 networks eventually collapse, predicting that only a select few will maintain their relevance. Among these, he identified Bitcoin (BTC), Ether (ETH), Solana (SOL), and Zcash (ZEC) as the protocols he expects to endure through the next market cycle.

Last year, Monad successfully raised $225 million from venture capital firm Paradigm. The blockchain went live on Monday, coinciding with the distribution of its MON token.

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

Hayes Maintains Optimistic Outlook

Despite his concerns about Monad, Hayes retains a bullish perspective on the cryptocurrency market as a whole, largely due to a forthcoming round of monetary expansion. He argued that governments, especially the United States, are gearing up for another influx of liquidity amid political campaigns and slowing economic growth.

“I think we are at the end of the beginning of this cycle, and the massive amounts of crazy bull market money printing are just ahead of us,” he stated.

He also dismissed the popular belief in a four-year Bitcoin cycle, asserting that historical market booms were largely driven by global credit expansion from the U.S. and China, not just Bitcoin halving events. Hayes claimed that Bitcoin tends to respond first when liquidity diminishes, calling it the “last free-market smoke alarm” for the global financial system.

Future Focus on Privacy Coins

Looking forward, Hayes believes that privacy technologies will be at the forefront of the next cryptocurrency narrative. He foresees a resurgence in interest surrounding zero-knowledge systems and privacy coins. Additionally, he suggests that the institutional adoption of cryptocurrency will likely gravitate toward Ethereum, particularly through avenues like stablecoins and tokenized finance.

Earlier this month, he disclosed that Zcash is now the second-largest holding in his family office, Maelstrom, following Bitcoin.

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