Crypto: Arthur Hayes Predicts Massive Bull Run Despite AI Fears

Arthur Hayes remains very bullish on crypto. The co-founder of BitMEX believes that current concerns around artificial intelligence and cryptographic security will not be enough to prevent a new major cycle. His scenario is mainly based on one element he has been tracking for years: liquidity. If governments start massively creating money again to support the economy, Bitcoin and other crypto assets could benefit.

Arthur Hayes sees fear of AI as a temporary obstacle

Arthur Hayes does not seem particularly worried. The Chief Investment Officer of Maelstrom considers the questions around AI and encryption as the last episode of fear that crypto will have to go through before a possible major bullish movement. A reading consistent with his recent thesis on a possible “tsunami” of dollar liquidity.

In a message posted on October 8, Hayes compared the current situation to several difficult periods already experienced by Bitcoin. He notably cites the 2017 block size war, the Covid-19 pandemic, and the FTX collapse accompanied by a sharp rise in interest rates.

Each time, the crypto market had to absorb a new source of uncertainty. Hayes now classifies fears related to AI in the same category. He talks about FUD, the acronym used in crypto to designate 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.

That does not mean, however, that Bitcoin or the major cryptographies currently used have been broken by AI. Yehuda Lindell, head of cryptography at Coinbase, has precisely rejected the idea of an imminent break of current cryptographic systems. According to him, there is no evidence today that AI has managed to break the fundamental mathematical assumptions on which these protections rely.

Liquidity remains the real engine of his crypto bull run

For Arthur Hayes, the reasoning almost always comes back to the same place: the money available in the financial system. His bullish scenario does not mainly depend on a technical improvement of Bitcoin, a new memecoin, or a cycle related to the halving.

He looks at the dollars. Hayes believes that governments and central banks will be pushed to support the markets when financing costs become too heavy. More money and more credit could then reach risky assets.

Bitcoin figures prominently in this list. In August, Hayes had already associated the increase in US Treasury bond buybacks with better liquidity conditions. Buybacks allow the Treasury to repurchase some bonds already in circulation, notably to improve market functioning.

For Hayes, this mechanism can contribute to easing financial conditions and, indirectly, favor Bitcoin. This is not a new position. In March, he still explained that he would not immediately bet on Bitcoin without a clearer signal of liquidity return.

A few months later, his speech is much more aggressive. He now believes that the financing needs of the economy, particularly those related to artificial intelligence, could create the monetary conditions necessary for a strong crypto rise.

His statement published this week sums up his thinking quite well: money will be created and assets will eventually rise. The mechanism is obviously not automatic. Creating more liquidity does not guarantee it will end up in Bitcoin or altcoins. Money can remain in the banking system, finance companies, buy bonds, or go into stocks. Hayes simply bets that part of it will end up reaching crypto.

An AI crisis could paradoxically benefit crypto

The reasoning becomes more surprising when Hayes talks about the artificial intelligence boom. Tech companies are currently spending considerable sums on chips, data centers, electricity, and infrastructure. Part of these investments rely on credit. Hayes thinks a problem could appear around 2027 or 2028.

If revenues generated by AI infrastructure are insufficient to cover accumulated financial commitments, some companies or lenders could come under pressure. His scenario even envisages a need for support representing several trillion dollars.

And it is precisely here that he becomes bullish on crypto again. A financial crisis related to AI could push authorities to intervene: guarantees, purchases, public credit, or money creation. The bigger the response, the more Hayes believes 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 governments respond with a lot of liquidity. Finally, part of this money still needs to find its way to crypto markets.

Many steps. Meanwhile, AI and blockchain also continue to get closer 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 eventually causes financial difficulties, the remedy could be extremely favorable to Bitcoin. A fairly simple paradox: the next major crypto bull run could be fueled by the financial problems of the technology that worries the market today.

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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.