Janice R. Andrews
In preparation for potential market turbulence surrounding the upcoming U.S. presidential election, Maelstrom’s Chief Investment Officer Arthur Hayes has implemented a strategic hedge using Ethena Lab’s USDe stablecoin, while maintaining significant exposure to major cryptocurrencies.
Hayes, who co-founded BitMEX, disclosed in a CoinDesk interview that Maelstrom has positioned 5% of its portfolio in staked USDe, currently generating approximately 13% yield. The fund continues to hold substantial long positions in Bitcoin, Ether, and various other digital assets.
The USDe Strategy
Ethena’s USDe employs sophisticated mechanics to maintain its dollar peg, utilizing a collateralized stablecoin system combined with hedged arbitrage. The stablecoin’s delta-neutral architecture provides protection against market volatility through a balanced approach to crypto exposure. When staked, USDe transforms into sUSDe, offering additional protocol rewards while maintaining price stability.
Hayes views this allocation as temporary, stating his intention to redirect the USDe position back into cryptocurrencies once election-related uncertainties dissipate. “If the election results are accepted without social unrest, we’ll shift all sUSDe holdings into crypto,” he explained.
Market Expectations
As the November 8 election approaches, cryptocurrency markets are pricing in potential volatility. Deribit’s BTC options market suggests approximately 3.8% volatility for election day, reflecting traders’ expectations of significant price movements.
The contest between Republican Donald Trump and Democrat Kamala Harris remains competitive, with decentralized betting platforms currently favoring Trump, who is generally perceived as more crypto-friendly.
Beyond Electoral Politics
Hayes maintains that the election’s outcome will have limited impact on cryptocurrency’s long-term trajectory. He argues that regardless of the winner, expanding budget deficits will continue to strengthen Bitcoin’s position as a hedge against inflation. “Both candidates will expand the money supply significantly. The medium-term outlook for crypto remains positive regardless of who takes office,” Hayes noted.
This perspective aligns with other prominent investors, including Paul Tudor Jones, who anticipates persistent inflationary pressures regardless of the election’s outcome. Many traders anticipate Bitcoin potentially reaching $80,000 in the post-election period.
Geopolitical Considerations
Hayes also highlighted potential geopolitical risks in the post-election period. He specifically warned about the possibility of increased military activities by U.S. allies and adversaries during any potential leadership transition period. While such developments might initially pressure risk assets like cryptocurrencies, Hayes suggests that the inflationary impact of military conflicts could ultimately reinforce crypto’s value proposition.
Risk Management Approach
Maelstrom’s current strategy reflects a balanced approach to risk management. “Position sizing and minimal leverage are key to navigating these risks,” Hayes emphasized. The fund’s use of USDe staking demonstrates a sophisticated approach to portfolio protection while maintaining optimistic long-term crypto exposure.
The strategy positions Maelstrom to weather potential election-related market disruptions while remaining ready to capitalize on what Hayes anticipates will be a strong crypto market rally once political uncertainties resolve. This approach highlights the growing sophistication of risk management strategies in the digital asset space, particularly during periods of heightened political uncertainty.
