Cofounder, BitMEX
BITCOIN TO $125K: Why Arthur Hayes Says the "Slow Grind" Has Begun
In this high-signal interview, Arthur Hayes breaks down the divergence between Bitcoin and the NASDAQ, the impact of AI on the SaaS industry, and why he believes we are entering a "slow grind" bull market fueled by a stealth shift in global liquidity.
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About Arthur Hayes
Arthur Hayes, co-founder of BitMEX and CIO of Maelstrom, has been a frequent commentator on the intersection of macroeconomics, AI, and crypto markets. He has argued that the AI investment boom constitutes a bubble, stating that "the AI bubble will burst" at some point, though he cautioned he would "never short anything AI." Hayes has said that a correction in AI could drag Bitcoin down with it, as "if AI goes down 50%, people have capital with which to invest in Bitcoin. And so I think Bitcoin gets thrown out with the bathwater." He has also described the upcoming SpaceX IPO as a "classic crypto grift" and a "low float high FDV shitcoin," predicting that insiders would be "dumping on you starting in July through October." Hayes has publicly sold several crypto positions, including HYPE, NEAR, Worldcoin, and Zcash, stating he was "solving for capital preservation" and moving to cash and gold. He has described Hyperliquid as "one of the best products ever made in crypto" and "the best business in crypto." Regarding Federal Reserve policy, Hayes has characterized incoming Fed Chair Kevin Warsh as a "dove" despite a hawkish reputation, arguing that his creation of a task force signals a desire to maintain an illusion of hawkishness while ultimately facilitating money printing. Hayes has said he believes Bitcoin could reach $125,000 by the end of the year, but also stated that "Bitcoin cannot rally in the short term if the entire world takes serious losses from deflation of the AI bubble globally."
Transcript (74 segments)
✨ AI-enhanced transcript with speaker attribution
A
Arthur Hayes0:00
I mean, the fact at the end of the day, Bitcoin and crypto will go higher because retail people look at it and walls, right?
I
Interviewer0:04
Mhm.
A
Arthur Hayes0:06
They're disillusioned because the price isn't going up.
I
Interviewer0:08
Mhm.
A
Arthur Hayes0:08
And that has nothing to do with institutional and not institutional. Institutions don't determine where the price is.
If there's nothing useful being done for the average person, then this isn't going to go higher. If there's not enough money printing happening, then nothing is going higher. Whether whoever you think attends a conference or not is sort of irrelevant.
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Narrator0:25
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Let's start with the core observation. Bitcoin fell sharply around 50% while the Nasdaq remained relatively strong. Most investors assume these two should move together. Both are considered risk assets, both thrive in liquidity-rich environments, and both are sensitive to macroeconomic conditions. But Hayes argues that Bitcoin wasn't tracking big tech, it was tracking something else entirely. Instead of following companies like Apple, Microsoft, or Google, Bitcoin was reacting to signals coming from a different corner of the market. Software as-a-service, SaaS, companies. And those companies have been getting crushed.
I
Interviewer1:30
So, one other note that you put on the, I guess, the like a screen was that Bitcoin has been down 50% while the Nasdaq has remained kind of basically flat or at all-time highs.
A
Arthur Hayes1:44
Um... Could you just explain to me again what that means exactly? Like what's why is that happening? Why did that happen?
So, my interpretation of that is that Bitcoin was following a theme that credit is going to be destroyed because of AI knowledge worker job losses. So, obviously tech is a very monolithic term and when people say tech they usually mean the big tech stocks, Google, Microsoft, Amazon, Tesla. But, you know, consumer software as a service companies are some of the highest valued companies. These are everyone wants to build a SaaS company.
I
Interviewer2:21
Yeah.
A
Arthur Hayes2:21
These stocks have gotten absolutely crushed as the new models of cloud and ChatGPT, especially for people who code for a living, have come out. Like, I can create these products at a fraction of the cost. Why do I need a subscription at one of these SaaS companies? And those stocks have gone down a lot. In my mind that points to a possible credit deflationary event for the banking system. And if the central banks like the Fed believe that AI is a productivity miracle and will elevate growth without elevating inflation, they don't believe they need to print any money. They believe that the monetary system is adequately supplied with fiat liquidity. But these SaaS stocks are telling a different story and Bitcoin followed that story rather than following the big cap tech stocks.
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Interviewer3:04
Okay.
A
Arthur Hayes3:05
And so that's where I get my theory that this is a credit deflationary event that Bitcoin was foreshadowing and the monetary system was not creating enough liquidity to sort of head that off.
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Interviewer3:18
And so then do you think eventually you'll see the Nasdaq as a whole kind of turn down a little bit or will it just continue to remain elevated and Bitcoin will kind of...?
A
Arthur Hayes3:28
So, I think obviously then the war happened and so now we have an explicit wartime economy especially in the United States where they're going to spend more money on defense. There's all these programs where people have guaranteed off-take agreements with the government. They're considered strategic industries. There's loans, there's equity, all these things are flowing from the government and then the banking system, I argue, is going to provide trillions of dollars of credit to these strategic industries so that they can build more bombs.
I
Interviewer3:58
Yeah. What about the other big narrative that has dominated this bear cycle to this point is just OG cypherpunk people being disillusioned with how institutional things have gotten, and how those ethics, those axioms are kind of not important anymore. Do you subscribe to that or do you also not care?
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Arthur Hayes4:23
I mean, I think at the end of the day Bitcoin and crypto will go higher because we tell people to get in walls, right?
I
Interviewer4:28
Mhm.
A
Arthur Hayes4:29
They're disillusioned because the price isn't going up. And that has nothing to do with institutional or not institutional. Institutions don't determine where the price is. If there's nothing useful being done for the average person, then this isn't going to go higher. If there's not enough money printing happening, then nothing is going higher. Whether you think it attends a conference or not is sort of irrelevant.
I
Interviewer4:50
Do you believe Larry Fink when he talks about transparency and immutability or anything like that? I've asked other people this too, by the way.
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Arthur Hayes4:57
I don't know. I think at the end of the day there's a lot of costs to be saved for banks using a public blockchain, right? And I'm sure internally there's a fight between middle office and technology people who will literally lose their jobs if a bank went to fully using a public blockchain to do settlements and all these sorts of things. That doesn't mean they like Bitcoin or subscribe to any of the ethos behind it. This is literally just like you could fire an entire back and middle office compliance functions if you did everything on chain. And how much money would you save and how much bigger of a bonus could you get as a front office senior manager. I think that is the tension that's going on internally in a lot of these organizations.
I
Interviewer5:37
Okay. Two more questions. So, in your presentation, you said that Bitcoin has bottomed. I think you said something like long here or I don't know.
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Arthur Hayes5:49
Get long, get wrong.
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Interviewer5:50
Longer, yeah. Longer be wrong. There we go. So this is the start of the bull run then, just to make it clear?
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Arthur Hayes5:55
Well, I don't know about a bull run that says we're going to go up double in the next 2 months. No, I think this is a slow grind. I still think there are so many things for people to worry about, whether it's AI deflation, whether it's XYZ said this on social media, therefore the US, Iran, China, Russia, whatever is going to do something that's bad for humanity. There's still that. So there's a big wall of worry to quieten. So let's talk about a bull run once Bitcoin has reestablished 125,000.
I
Interviewer6:23
Yeah.
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Arthur Hayes6:23
And then we'll see.
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Interviewer6:24
Bull market retest time once. Okay, very good. So you're at the Bitcoin conference today and then next week you'll be at Consensus Miami. I was wondering, do you try to take the temperature or do a vibe check at these conferences at all or is it just simply to meet people and get your message out?
A
Arthur Hayes6:42
Well, it's one to meet people and get the message out, but I think the vibe check now is obviously people are disappointed. The room was half empty, right? This is Bitcoin Vegas, the biggest Bitcoin maximalist conference in the world and half the seats were empty. So obviously it's a vibe because the price is pretty much where it was last year at the same time, but everyone felt very optimistic that the US government was going to support their bags, and obviously it turned out that if the money isn't printed in big enough quantity and all these other things happen, then price isn't going anywhere.
I
Interviewer7:14
Yeah, yeah, yeah.
A
Arthur Hayes7:14
So I think it's all about disillusionment.
I
Interviewer7:16
You made a point of talking about liquidity and how you believe liquidity is bottoming and is going to start to rise up. I've heard other macroeconomic folks talk about how the real economy, especially in the US, has not been doing well, but is starting to do better and there are some signs that we're going to be entering this productivity boom for, I would say, non-financial assets. And then because non-financial assets will do less well on a comparative basis, liquidity will go from financial assets to non-financial assets, which is in a way liquidity leaving those areas. Do you disagree with that? And if that does happen, wouldn't that hurt things such as Bitcoin?
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Arthur Hayes8:01
I mean, I don't really look too deeply at where the money is flowing. I try to take a bigger view because obviously you have to go to a bank loan officer and ask where they are lending and what type of company. I just look at the past history and say, if there are more units of fiat in the world, whatever they're being spent on, then Bitcoin, which is literally just a derivative of how much fiat is there in the world, mathematically has to go up in price. So I don't have to worry about where it's going. But yeah, if I'm an individual stock picker, then that makes a lot of sense in terms of trying to figure out what areas are going to be favored by banks.
I
Interviewer8:38
Okay. Yeah. All right. And you also spent some time talking about Warsh and Bessent and how the game plan is basically a swap as you call it, which I like. I like this framing because it makes sense for crypto people at least. But basically, to me, what you were saying is swapping who is issuing debt, right? Right now it's mostly the government.
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Arthur Hayes9:05
No, who's buying it?
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Interviewer9:06
Who's buying debt, right?
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Arthur Hayes9:07
Well, who's holding it at the end of the day?
I
Interviewer9:08
Okay. Yeah, yeah, yeah. And Warsh and Bessent want to move it from basically the government to private banks. That's the swap, but it's neutral.
A
Arthur Hayes9:16
It's neutral.
I
Interviewer9:17
Yeah. And that makes a lot of sense to me. I just wondered if you had an opinion on whether they're going to be successful or not at this thing. Do you think they're going to be able to do this or do you think trying to pull off this swap will be too disruptive and they'll have to go back to...?
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Arthur Hayes9:33
It's already working to a large extent. If you look at the largest banks' quarterly results, they've increased the amount of treasuries they're holding. They've increased the amount of intermediation they're doing in the markets on their trading and treasury books. They've increased how many repos they're sponsoring. Reserves are declining at the Fed. So this is working, right? And it's only going to accelerate with certain deregulation they're pushing at the Fed and other organizations in the US. The Fed will shrink its balance sheet, but the commercial banking system will increase it at the same time.
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Interviewer10:05
Okay.
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Narrator10:05
All right. So, what is credit deflation? In simple terms, it's when the availability of credit in the financial system contracts. Lending slows down, risk appetite declines, and economic activity can weaken. Hayes believes the SaaS downturn reflects a broader realization. If AI reduces the need for human workers, especially high-paid knowledge workers, then income, borrowing, and spending could all decline. That's a deflationary force. And here's the key insight. Bitcoin reacted to that deflationary signal before traditional markets did. While the Nasdaq was still buoyed by mega-cap optimism and AI hype, Bitcoin priced in a tightening credit environment.
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Interviewer10:47
The number of hacks makes me a little risk off for DeFi. I don't know if you're feeling that. And I don't know how that would change your view of Hyperliquid. Not that it's going to happen, but just that you have to kind of price that risk.
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Arthur Hayes11:03
Well, that risk has been ever present. It's just people don't recognize it. And so, obviously, with Drift, with KelpDAO, with all these things, it's a reminder that this is very experimental stuff.
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Interviewer11:14
Yeah.
A
Arthur Hayes11:15
There's a lot of human error involved. A lot of it's just laziness. Like, it's not like, yeah, there's all these social phishing campaigns, maybe with the North Koreans, but it doesn't really matter. It doesn't excuse the fact of having a one-of-one multi-sig or not being able to protect the integrity of your process flow in terms of how you sign transactions. So, I think that is the issue, not the tech. This is a human problem.
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Interviewer11:41
Okay. Does the number of hacks in the narrative that AI is going to enable, at least in the short term, an asynchronous number of attacks before defense is able to fight back, make you bearish for DeFi in the short term?
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Arthur Hayes11:59
I think it's the wrong question.
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Interviewer12:01
Okay.
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Arthur Hayes12:01
These hacks are human issues. There are people who had an operational process that was easier to do than doing it correctly, and they got owned. And so, whether it's AI or some souped-up nation-state actor attacking, if you can't even do a proper multi-sig correctly and have a proper signing process, I don't really care what your tech stack is.
I
Interviewer12:24
Okay. I see. So then you wouldn't be more bearish on the sector in general. Because for me, I look at that and I think there's probably a lot of teams that are like that, not focused on security. And so we might see a rash more of these hacks before everyone really starts to focus on it.
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Arthur Hayes12:45
Maybe, but again, if something's working, people don't care. You know, back to Mt. Gox in 2014, everyone was like, 'Oh, centralized exchanges, we're never going to put our money on an exchange again.' Price went down. Fast forward a year and a half later, price is back up, nobody cares anymore, right? How many hacks have happened on centralized exchanges? Obviously, some people have paid the money back, some haven't. Yet, we use them more than we did before. Again, if the price goes up, no one cares. Price is down, everyone's freaking out about DeFi this, DeFi that. But if we're in an environment where the strong projects are doing very well, everyone forgets all this stuff.
I
Interviewer13:23
Mhm. Are you bearish on any sectors in crypto right now or are you mostly...?
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Arthur Hayes13:32
I don't think about bearish things because I can't short things. So, I can be bearish on whatever vertical. Does it mean I'm going to put on a short? Absolutely not. There are so many ways teams can screw you with tokenomics and pump and dump schemes. You never want to be short any project. If you want to be short, just don't buy it.
I
Interviewer13:49
Okay. I see. All right. So, I was just in Paris for Paris Blockchain Week and the amount of optimism over there is starting to get high with MiCA. The regulation has been out for a year and a half. They have new licenses for payments and derivatives. I was wondering if you have any thoughts on Europe as a place for crypto. Is it a good place for crypto or is it still kind of far behind Asia and maybe North America?
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Arthur Hayes14:18
I just think it's who cares. It doesn't matter. It's irrelevant. And in most things, it's a great museum.
I
Interviewer14:24
Awesome. Nice. Flip it.
A
Arthur Hayes14:27
Yeah.
I
Interviewer14:28
Okay. Great. Anyway, for those listening, I really enjoyed your keynote. I hope they watch it.
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Arthur Hayes14:36
Short 15 minutes.
I
Interviewer14:37
Yes. Again, I told you I wish they had given you a little more time to let it breathe. But, let me ask you some other questions if you don't mind.
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Arthur Hayes14:44
Sure.
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Interviewer14:45
So, last time we spoke, we were talking about this stablecoin thesis. I think it was in Tokyo last year. And ever since then, I really bought into that idea and I went to conferences in Hong Kong, Japan, Europe, Middle East, talked with people from Pakistan and government officials. They're all worried or thinking about these stablecoin things. They all have a plan to fight back against it. And I was wondering, do you think that any of these countries are going to be able to stop this onslaught of dollar denominated stablecoins?
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Arthur Hayes15:24
If they are going to ban social media, sure. But unless they are able to do something like China where for most people in China who are not extremely wealthy, they're not going to spend extra money on a VPN to get around these rules. If Facebook is blocked in China, it's blocked in China. Right? And the Chinese firewall is very effective. They spend a lot of money and time on it. So if you want to be like China or in some parts of the Middle East that are very restrictive in terms of Western social media usage, and you're going to create your own homegrown alternative to that, then you have a chance. But if you're not going to ban the average person from using US big tech social media, you have zero chance of dissuading them from using a better currency, the US dollar.
I
Interviewer16:12
Yeah. Yeah, yeah. Okay. Doom and gloom.
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Arthur Hayes16:16
It was well for them. I don't know. It depends on...
I
Interviewer16:19
It's funny too. In Hong Kong, the business leaders there called it dollar colonization.
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Arthur Hayes16:26
Yeah, not wrong.
I
Interviewer16:27
It's not wrong. Okay. All right. So also last year when we talked, you were of the opinion that the United States would be forced into money printing sometime this year. Do you still think that's going to happen or do you think it's going to be pushed out?
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Arthur Hayes16:41
Well, the Fed is expanding its balance sheet. As of December of last year, they stopped quantitative tightening. They created this thing called reverse reserve management purchases, RMP, which is basically quantitative easing in a different wrapper. And so the Fed's balance sheet has been going up by $40 billion a month as I said it would. So they are printing money. Now, I didn't think it was fast enough to head off this AI deflationary impact, but now post the war we have a massive demand of credit coming from the US government to support strategic industries. That credit will be supplied by US commercial banks and then the regulators will give them the regulatory space to jack up the leverage on their balance sheet. So the money printing is happening, it's only going to accelerate.
I
Interviewer17:19
Yeah. Finally, Hayes discusses the rise of dollar-backed stablecoins. He argues that most countries have little chance of stopping their adoption. Why? Because stablecoins offer access to the US dollar, the world's strongest currency, through the internet. Unless governments impose extreme restrictions like China's firewall, people will continue to adopt them. This creates what some call digital dollarization or even dollar colonization.