Arthur Hayes: Most Layer‑1 Tokens Outside ETH and SOL Likely to Collapse
Arthur Hayes, co‑founder of BitMEX, warned that most newly launched Layer‑1 (L1) blockchain tokens will fail long term, naming Ethereum (ETH) and Solana (SOL) as the primary exceptions. In an Altcoin Daily interview Hayes said many L1s experience early price pumps driven by venture capital and speculation rather than sustainable fundamentals. He singled out Monad (MON) — backed by Coinbase Ventures — which rose about 45% post‑ICO to roughly $0.037 with a market cap near $398 million, but he expects a steep correction because of a high fully diluted valuation and low circulating supply. Hayes argued Ethereum’s ecosystem, supported by Layer‑2 solutions like Arbitrum and Optimism, positions ETH for institutional web3 adoption. He said Solana remains the second‑largest L1 but needs new catalysts after meme‑coin driven growth slowed. Hayes also listed Bitcoin (BTC), Zcash (ZEC) and Ethena (ENA) among his long‑term picks. Key takeaways for traders: elevated downside risk for small‑cap, VC‑backed L1 tokens; potential short or sell opportunities on recently hyped ICOs such as MON; relative resilience and institutional preference for ETH (and to a lesser degree SOL); and attention to on‑chain adoption metrics and fully diluted valuations when sizing positions.
Bearish
The news is bearish for hyped, small‑cap Layer‑1 tokens cited in the reports — particularly VC‑backed ICOs like MON. Hayes’ public prediction that most new L1s will fail increases downside risk by highlighting weak fundamentals: high fully diluted valuations, low circulating supply, and price moves driven by speculation rather than adoption. Short‑term, traders may see increased volatility and sell pressure on MON and similar tokens as momentum traders exit and longer‑term holders reassess positions. Opportunities for shorting or selling into rallies may arise. For ETH and SOL the effect is mixed to neutral‑bullish: Hayes names them as exceptions, reinforcing confidence among institutional and macro traders, which could support relative strength in ETH and, to some extent, SOL. Overall market stability may be unaffected at the large‑cap level, but small‑cap L1 liquidity and prices are likely to suffer, increasing tail‑risk for portfolios overweighted in new L1 projects.