With the U.S. election just a week away, markets are bracing for heightened volatility, and Arthur Hayes, co-founder of BitMEX and Chief Investment Officer at digital asset fund Maelstrom, is taking precautions. Hayes announced that Maelstrom has allocated 5% of its portfolio to staked USDe (Ethena USD), a yield-bearing stablecoin, while holding bullish bets on Bitcoin (BTC), Ether (ETH), and other cryptocurrencies.
“Given the uncertainty, Maelstrom has 5% of the fund in staked USDe, earning roughly 13%,” Hayes told. He also confirmed that the fund maintains significant long positions in crypto assets despite the election-related risks.
Using USDe to Hedge Volatility
USDe is a synthetic dollar developed by Ethena Labs that maintains a $1 peg through collateralized stablecoins and arbitrage strategies. The yield comes from funding fees earned by shorting BTC and ETH futures, and users holding staked USDe (sUSDe) automatically receive protocol rewards.
The delta-neutral structure provides protection against market swings ahead of the November 5 election and the announcement of results on November 8.
Navigating Election Turbulence
Hayes noted that potential social unrest after the election could spark short-term volatility. He cited predictions from decentralized markets showing Donald Trump leading Kamala Harris, though traditional polls show the race to be extremely tight.
“If the election passes without unrest, the markets will rally. Once we know who wins and the result is accepted, we will deploy all our sUSDe into crypto,” Hayes said.
As of Friday, Bitcoin options on Deribit suggest an expected volatility rate of 3.8% on election day. Crypto markets have historically experienced large swings even on non-event days, making this election even more critical for investors.
Election Outcome Won’t Derail Crypto’s Long-Term Growth
Hayes believes the outcome of the election will not significantly impact Bitcoin’s long-term prospects. “Both Trump and Harris will print trillions of dollars,” Hayes said, emphasizing that rising deficits will drive demand for Bitcoin and gold as inflation hedges.
“Crypto will thrive regardless of who wins. In the short term, markets are familiar with Trump’s economic strategy—tax cuts, deregulation, and business-friendly policies. But no matter who takes office, monetary expansion will continue.”
Legendary investor Paul Tudor Jones echoed a similar sentiment, predicting inflation will persist regardless of the election outcome. Many traders are now betting on a Bitcoin rally to $80,000 or higher after the election.
Geopolitical Tensions Remain a Threat
Hayes warned that global geopolitical risks could disrupt the markets. He pointed to potential escalation in the Middle East or Ukraine as major risks.
“If aggressive military action occurs during a post-election power transition, it will lead to a global ‘risk-off’ sentiment,” Hayes explained. “While war has inflationary effects that could eventually benefit crypto, it’s un-investable in the short term.”
Hayes advised caution, recommending low leverage and carefully sizing positions. “The way to play this risk is to size positions accordingly and use little to no leverage,” he said.
Maelstrom’s strategy reflects the dual nature of crypto assets—balancing short-term uncertainty with long-term confidence in Bitcoin and Ether as safe-haven investments.
