Arthur Hayes remains very bullish on crypto. The BitMEX co-founder believes that current concerns around artificial intelligence and crypto security will not be enough to prevent another big cycle. His scenario is based above all on an element that he has been following for years: liquidity. If governments start massively creating money again to support the economy, Bitcoin and other crypto assets could benefit.
In brief
- Arthur Hayes sees AI fears as a new “wall of worry” for crypto.
- Above all, it is banking on an increase in global liquidity to fuel the next bull run.
- A possible reversal of the AI boom could, according to him, trigger several trillion dollars in financial support.
Arthur Hayes sees fear of AI as a temporary obstacle
Arthur Hayes doesn’t seem particularly worried. Maelstrom’s chief investment officer sees the questions around AI and encryption as the last episode of fear that crypto will have to go through before a possible big bullish move. A reading consistent with his recent thesis on a possible “tsunami” of dollar liquidity.
In a post on October 8, Hayes compared the current situation to several difficult times that Bitcoin has already gone through. He cites in particular the war over block sizes in 2017, the Covid-19 pandemic and the collapse of FTX accompanied by a sharp rise in interest rates.
Each time, the crypto market had to absorb a new source of uncertainty. Hayes now places AI fears in the same category. He’s talking about FUD, the acronym used in crypto for fear, uncertainty and doubt.
The comparison has its limits. Security issues related to AI are not entirely imaginary. Systems using artificial intelligence can already help researchers analyze code, find errors or speed up certain mathematical research.
This does not mean that Bitcoin or the major cryptographies in use today have been broken by AI. Yehuda Lindell, head of crypto at Coinbase, rightly dismissed the idea of an imminent breakdown of current crypto systems. According to him, no evidence today shows that an AI has managed to break the fundamental mathematical assumptions on which these protections are based.
Liquidity remains the real engine of its crypto bull run
At Arthur Hayes, the reasoning almost always comes back to the same place: the money available in the financial system. Its bullish scenario therefore does not mainly depend on a technical improvement in Bitcoin, a new memecoin or a cycle linked to halving.
He looks at the dollars. Hayes believes governments and central banks will be pushed to support markets when funding costs become too burdensome. More money and more credit could then reach risky assets.
Bitcoin is high on this list. In August, Hayes had already linked increased US Treasury bond buybacks to better liquidity conditions. Buybacks allow the Treasury to take back certain bonds already in circulation, in particular to improve the functioning of the market.
For Hayes, this mechanism can help ease financial conditions and, indirectly, favor Bitcoin. This is not a new position. In March, he further explained that he would not immediately bet on Bitcoin without a clearer signal of return of liquidity.
A few months later, his speech is much more offensive. He now believes that the financing needs of the economy, and particularly those linked to artificial intelligence, could create the monetary conditions necessary for strong growth in crypto.
Its published formula this week sums up his thinking pretty well: money will be created and assets will eventually rise. The mechanics are obviously not automatic. Creating more liquidity does not guarantee it will end up in Bitcoin or altcoins. Money can stay in the banking system, finance businesses, buy bonds or go into stocks. Hayes is simply betting that some of it will eventually reach crypto.
An AI crisis could paradoxically benefit crypto
The reasoning becomes more surprising when Hayes talks about the boom in artificial intelligence. Tech companies are currently spending huge sums on chips, data centers, power and infrastructure. Part of these investments is based on credit. Hayes thinks a problem could emerge around 2027 or 2028.
If revenues generated by AI infrastructure are not sufficient to cover accumulated financial commitments, some companies or lenders could find themselves under pressure. His scenario goes so far as to envisage a need for support representing several trillion dollars.
And this is precisely where he becomes bullish again on crypto. A financial crisis linked to AI could push the authorities to intervene: guarantees, purchases, public credit or monetary creation. The larger the response, the more Hayes believes that Bitcoin could benefit from the depreciation of traditional currency.
This is a scenario, not a certainty. It first assumes that part of the current AI boom ends badly. It then assumes that governments respond with lots of liquidity. Finally, some of this money still needs to find its way to crypto markets.
Lots of steps. In the meantime, AI and blockchain also continue to come together directly. Decentralized computing, autonomous agents and machine-to-machine payments are already fueling new projects combining AI and crypto. Arthur Hayes mainly looks at the other side of the phenomenon. For him, even if AI ends up causing financial difficulties, the remedy could be extremely favorable to Bitcoin. A fairly simple paradox: the next big crypto bull run could be fueled by the financial problems of the technology that is worrying the market today.
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