Conversation with Arthur Hayes: AI Has Drained Market Liquidity, BTC Will Be Below 100k by Year-End

Guest: Arthur Hayes, Co-founder of BitMEX

Host: Kyle Chasse, CEO of Master Ventures

Podcast Source: Kyle Chasse crypto

Original Title: Arthur Hayes: Bitcoin's Final Dump Before The Pump

Release Date: June 10, 2026

Key Points Summary

Arthur Hayes has cleared his largest crypto positions—HYPE, NEAR, Worldcoin, and Zcash. The reason is not directly related to crypto itself but stems from a chain of macro derivations, from oil prices and the Iran war to Trump's midterm election strategy and the bursting of the AI bubble. He believes Trump might reverse his stance and attack the AI industry to salvage his midterm election prospects, and once the AI bubble peaks, the crypto market cannot remain unscathed. He sees SpaceX's IPO with a $1.8 trillion valuation and a 100x price-to-sales ratio as a ticking liquidity time bomb set to detonate sooner or later.

Highlights

Why Clear Everything

• "Voters don't like high oil prices, and they don't like energy-driven inflation."
• "The higher the oil price, the more eager everyone is to negotiate, and then when the oil price drops, suddenly no one wants to reach an agreement."

Trump's Turn Against AI

• "If he wants to pull a rabbit out of the hat, the only issue he can flip on is AI—temporarily take the Democrats' microphone and say he wants to protect the American people from AI. Then everyone will forget it was the Republicans who financed all this."
• "The most destructive things to the AI narrative are taxes and regulation."

New Portfolio Allocation

• "Most of my liquid assets are in government bonds and energy stocks."
• "I'm not saying AI won't continue to grow, but the market's willingness to pay forward multiples for that growth will decline, and therefore the prices of these assets will fall."

The Math of the AI Capital Expenditure Bubble

• "I trade based on feel and intuition, not so much on analysis. I feel we're at some stage of the AI bubble; I'm not sure which one."
• "You can't pay 100 times sales for SpaceX or any AI company when both profits and capital expenditures are decelerating. The focus is on how fast the growth is, the rate of change, and your perception of that rate of change."
• "When you invest in AI, you're not investing in profits; you're investing in data center capex construction—you're betting on the second derivative, the acceleration or deceleration of the trend. If the trend is accelerating, you're willing to pay infinite multiples for forward revenue; if it's decelerating, you're not."
• "We've already reached an $800 billion capex scale in 2026. By 2027, this second derivative will start to decelerate—you cannot pay 100 times sales for SpaceX or any AI company when both profits and expenditures are slowing."
• "There will always be conflict between capital and labor, whether voluntarily or by force, and at some point, some kind of settlement will inevitably be reached."

Why Bitcoin Has Underperformed AI

• "Since ChatGPT's commercialization, US M2 has increased by about $1.5 trillion, but during the same period, AI and AI-related companies have issued about $1.5 trillion in debt—with $1.3 trillion concentrated between 2025 and 2026. AI has sucked up all the excess liquidity."
• "When a bubble bursts, all correlations go to 1—AI falls, Bitcoin falls, all assets fall together until the dust settles, and then certain specific assets start to outperform."
• "In the next six months, due to rising oil prices and US political factors, a major correction will occur in the AI complex, and Bitcoin will not be spared."

The Trap of the SpaceX IPO

• "The market's expectation isn't just normal trading; the market expects this to be an IPO—it needs to surge 50%, have a ridiculous pop to tell me the market still believes in AI, picked the right star company, and it will continue to soar."
• "SpaceX's issuance market cap is around $1.8 trillion; it will directly become the world's seventh-largest company. SpaceX trades at close to a 100x price-to-sales ratio. That's fucking ridiculous. It will be the seventh-largest company globally and has proven nothing."
• "It's a classic crypto scam model: low float, high fully diluted valuation, 4% to 5% float, climbing to nearly 25% by September—insiders will continuously dump on you from July to October."

Evidence for an Anti-AI Strategy

• "I used Perplexity AI to search for any information on data center construction restrictions or local opposition bills in all competitive districts. The result: if Trump goes anti-AI, it could be enough to flip enough seats for him to retain the House."
• "Trump has no ideology; he only cares about winning. In 2020, he sent checks to every American—that was the purest direct money handout. So don't think he won't pivot to naked populism."

The Fed, Waller, and Interest Rate Risk

• "Oil prices are higher and won't come down in the near term. The two-year Treasury yield is currently about 60 basis points above the effective federal funds rate. The market is telling the Fed: You need to hike."
• "Bubbles fear rising interest rates the most. The rising cost of capital always prompts people to leave the casino in some form."
• "Currently, I see no room for Waller to cut rates. If rate cut expectations are one of the pillars supporting your optimism about the AI bubble and its continuation, I think you need to seriously question that assumption."

Crypto Catalysts and Re-entry Timing

• "I really don't see much money printing happening, and even if there is, it goes directly to AI construction."
• "If we return to the perfect economic bed of high growth and low inflation, what would you buy? Would you buy Nvidia or Bitcoin? You'd absolutely choose Nvidia, Samsung, right? Because they've gone up 50x in two years or something. Would you buy Bitcoin? Of course not."
• "That's when crypto can outperform—AI is credit-impaired, not that it ceases to exist, but it's not flying high anymore, so investors need to trade something else. I hope that something else is crypto, and then liquidity will flow back to crypto."

Quickfire Q&A

• "Bitcoin above or below $100k by year-end?—Below."
• "Today, if you put $1 million into any asset—Bitcoin, HYPE, short-term Treasuries, gold?—ExxonMobil."

Why Clear Everything

Host Kyle Chasse: Arthur, welcome back. You recently sold all your Zcash, HYPE, NEAR. Everyone's calling you an exit scammer, a pump-and-dump. Why did you sell everything, what's going on?

Arthur Hayes:

I just published an article called 'Reality Check,' about five thousand words, laying out the argument I'll try to summarize in a few minutes on this podcast. If you want a deeper dive, I highly recommend reading it on my Substack. But essentially, the core lies in a reflexive interaction between oil prices and Trump's midterm election rhetoric—he needs to help Republicans defeat Democrats in November and retain both houses of Congress. The problem is the current Iran war—whether you like it or not, it's there, here, and now.

So Trump and the Iranian Revolutionary Guard Corps need some kind of agreement to end this conflict. And both sides have a real constraint: oil prices determine how angry different parts of the world are with each party. Trump has to worry domestically—voters don't like high oil prices, and they don't like energy-driven inflation. Iran faces pressure from China and other developing nations—"What the hell are you doing? We need this oil, we need these commodities through the Strait of Hormuz. I know the US attacked you, but figure it out." So, the higher the oil price, the more eager everyone is to negotiate, and then when the oil price drops, suddenly no one wants to reach an agreement. We've been swinging back and forth in this tug-of-war for about three months, or as long as the war has been going on.

As this process unfolds, we are actually gradually depleting commercial and national stockpiles of oil and other hydrocarbons. Pick any energy analyst; their charts vary but the conclusion is the same—pre-war inventories were ample, so people believed in an oversupply of oil and gas, leading to relatively low prices. But we are now consuming these surpluses at an increasingly rapid rate. We'll reach some level at some point—I don't know how many billion barrels, each analyst has their own number and date. Once we cross that date, things will suddenly get very, very bad. And the only way to rebalance the market is to sharply push up oil prices.

This is the worst-case scenario—Trump and the Iranian Revolutionary Guard fail to reach an agreement. By October, the Strait of Hormuz remains effectively blocked, with only 25% to 30% of shipments passing through, far from enough. The more likely scenario is that some agreement will be reached in a month or two, and shipping through the Strait is somewhat restored. But then everyone needs to rebuild inventories; you have to rebuild national reserves, and of course, you'll hoard more than before—because you've just experienced what it's like to be completely at the mercy of Trump and a bunch of Iranian generals, who decide whether your country receives goods or not. So you'll think: "I'm going to hoard more oil, gas, helium, everything needed to run a modern economy." This will create more demand. While it might not push prices to the highs of a catastrophic scenario, it still means oil, gas, and other commodity prices will be higher in three to four months than they are today.

The Link Between Oil, War, and Elections

Arthur Hayes:

Following this logic to the midterm elections (November 2026), Trump and his Republican buddies are likely to lose the House. If you check the odds on Polymarket now, the probability of Democrats retaking the House has soared to 82%.

Why is this happening? Clearly, Trump is getting hammered on cost-of-living issues. People think inflation is terrible and worsening. In the eyes of the public, Republicans control the White House now, and this damn conflict and war were started by them, so naturally, Republicans get the blame. That's why people think they'll lose, and lose badly.

The problem is you really can't do much about inflation—policy has long lags, and supply chains are only now digesting what happened three or four months ago. I don't think Trump can turn the inflation narrative around much. People see and feel it at the gas station; Trump has no Jedi mind tricks to make you believe inflation isn't real—it is, and you see it every other day when you fill up. So, what other issue can stir the entire US political spectrum? The answer is AI data centers—regulation around them, taxes, all of that. I think Democrats are finding a great campaign message: No more data centers, tax AI giants, regulate AI. Because it's not just poor people losing jobs; rich people's jobs will be replaced by AI too, at least that's the fear.

Trump's Turn Against AI

Arthur Hayes:

If, as the opposition, you can harness this fear, you have two powerful messages: one, the brutal inflation caused by Republican war; two, the AI construction boom, essentially backed by Republican politicians. So my theory is, if Trump wants to pull a rabbit out of the hat, the only issue he can flip on is AI. Take the Democrats' microphone and say: "We're going to scrutinize data centers more, we're going to have an AI national dividend, tax them." That's Trumpian talk; he can say a lot of things, whether he does anything after November is another matter. I think this is their only viable path to win, painting themselves as the party protecting Americans from AI. Then Americans will forget it was the Republicans who financed all this, because people are forgetful. So I think this is the primary risk.

And Trump's willingness to attack AI depends purely on oil prices, which are the result of his reflexive relationship with the Iranian Revolutionary Guard. The longer this war drags on without a resolution, the more we accumulate commodity pressures that will cause prices to spike later, and the more likely Trump is to target AI in an attempt to win the election, or at least help Republicans keep the House. Obviously, the most destructive things to the AI narrative are taxes and regulation. We've seen this in Korea—a Korean politician stood up and said some kind of national AI tax should be levied, and Cosby (presumably a typo for a stock or company) fell by its daily limit that same day. So I think if this rhetoric starts being publicly espoused by the ruling party, especially by Trump, you'll see the AI bubble peak, at least in the coming months leading up to the election, and that will drag down the crypto market along with it. That's the overall core argument. I really didn't want to think about this anymore, so I cleared my entire portfolio in the latter half of last week.

New Portfolio Allocation

Host Kyle Chasse: Where are most of your liquid assets now, cash or Treasuries?

Arthur Hayes:

Treasuries and energy stocks.

Host Kyle Chasse: You still think if the AI bubble bursts, energy can hold up?

Arthur Hayes:

We still need oil, whether you like it or not. People need oil; it powers civilization. And I'm not saying AI won't continue to grow. The issue is that our willingness to pay forward multiples for that growth will decline, and therefore the prices of these assets will fall. That doesn't mean these companies won't have beautiful earnings, just that we thought they'd be even more beautiful, and they're not, so we sell those stocks. That's the logic.

The Math of the AI Capital Expenditure Bubble

Arthur Hayes:

I trade based on feel and intuition, not so much on analysis. I feel we're at some stage of the AI bubble; I'm not sure which one. I listened to Marco Papovich's podcast over the weekend. He's a strategist at BCA, has a great YouTube channel called Geopolitical Cousins; I highly recommend subscribing. He made an important point, both on the podcast and in his writings: When you invest in AI, you're not investing in profits; you're investing in data center capex construction. I often forget this myself: You're investing in the second derivative, the acceleration or deceleration of the trend. If the trend is accelerating, you're willing to pay infinite multiples for forward revenue; if it's decelerating, you're not, and this thing won't rise as fast as you need it to.

He recently shared a chart showing the second derivative of capex growth; the larger the number, the harder it is to accelerate. We're already at $800 billion in 2026, and he predicts the second derivative of AI capex will start decelerating from 2027. You cannot pay 100 times sales for SpaceX or any AI company when both profits and capex are decelerating. Even if these companies' revenues are still growing, that's not the point—the point is how fast they're growing, the rate of change, and your perception of that rate of change. Mathematically, we know that based on the law of large numbers, in the near future, capex growth cannot be as fast as it was from 2023 to 2026; it's physically impossible. So when will the market discount this future and shift to "I'm no longer willing to pay 50, 60, 70 times earnings for these AI stocks or supply chain companies"? When will the market realize that opposition parties worldwide are leveraging this zeitgeist—"Fuck data center inflation, fuck AI replacing my job"? Why are only Elon, Sam Altman, Zuckerberg, and maybe fifteen people becoming trillionaires, privatizing all of human civilization's knowledge for themselves—where's my share? This isn't unique to America; the whole world is asking the same question: If AI is trained on human interaction data, if they legally and illegally used all this public and private data to build these things, why do they get to keep all the profits? For those with enough assets to participate in this equity story, it's a legitimate question.

At some point, the market will sense a backlash. There will always be conflict between capital and labor, whether voluntarily or by force, and at some moment, some kind of settlement will inevitably be reached. If you're holding those assets when the settlement happens, you usually get crushed. These thoughts have been swirling in my head. So I sat down, tried to figure out what's actually going on, and then spent a morning clearing my positions.

Why Bitcoin Has Underperformed AI

Host Kyle Chasse: How do you think the market will move from now until year-end?

Arthur Hayes:

To answer that, I've been thinking about another question: Why hasn't Bitcoin risen to a higher level since November 2022? I've said the same thing repeatedly on your show and many others: It's all about liquidity. If there's more liquidity in the future, Bitcoin should rise. But clearly, that's been wrong. Because if we look from ChatGPT's commercialization on November 30, 2022, until now, Bitcoin has risen, but Nvidia and all those AI stocks have risen much more. And look at when Bitcoin peaked: last October, at $125,000. So, all the liquidity created during this period—my model tells me trillions have been created—why isn't Bitcoin at $500,000 or $1 million? Why has it underperformed AI?

I usually don't look at where money flows; I just say "more money, so Bitcoin should rise." That's a lazy way of thinking; it worked in the past, but not this time. So I went back and re-examined my mental model, asking myself: What did I miss? The answer is we all believe AI might be one of the most transformative technologies in history, and there's massive, trillion-dollar-level capex construction happening. But how much debt has AI swallowed during this period? Has AI essentially crowded out all other risk assets, pre-emptively absorbing excess liquidity?

At a high level, I don't usually use M2 because I think it's too coarse, but let's use it for example. From ChatGPT until now, US M2 has increased by at least $1.5 trillion. I asked a reliable Perplexity AI: How much debt has been issued to AI and AI-related companies? The estimate is around $1.5 trillion, with $1.3 trillion concentrated in 2025-2026 issuance. So, while we can say this AI mania ignited in late 2022, the capital market's debt pump actually skewed heavily to the later stage, really gearing up only recently.

My theory is Bitcoin could rebound from lows because there indeed was a lot of liquidity created, and AI didn't consume much of it until 2025, giving Bitcoin a clear blue sky to ride that liquidity. From 2022 to mid-2025, reverse repo declined, etc., various factors favored it. But if you look at charts of AI companies' capex and loans, the real ramp-up started in 2025, especially 2026. And this is precisely the period where we observed Bitcoin struggling, peaking last October, now down 50%, 60%. So if all liquidity is flowing to AI, and there's no sign of stopping. If an AI bubble correction or burst occurs, investors won't suddenly have a pile of money to rush into Bitcoin; they'll sell AI, sell Bitcoin, sell everything. When a bubble bursts, all asset correlations are 1. Everything falls together until the dust settles, and then certain specific assets start to outperform.

Therefore, if I believe a major correction in the AI complex will happen in the next six months due to rising oil prices and US politics, Bitcoin cannot be spared. It should perform better after the correction, but you have to go through that decline first. That's why I currently don't see a very favorable environment for Bitcoin and other cryptocurrencies. And obviously, I did very well on my NEAR, HYPE, Worldcoin, and Zcash positions; I sold at a profit. I wanted to pocket the profits from these trades and sit on the sidelines. These assets might continue rising, but at least in my mental model, I'm uncomfortable with the risks of holding at this point—the foreseeable unknowns and how they might evolve. That's why I pulled my chips.

The Trap of the SpaceX IPO

Host Kyle Chasse: Another thing I've been thinking about: The S&P 500 is rising, but most stocks are actually falling; the entire index is being dragged by a handful of tech stocks. More importantly, we're facing new listings from OpenAI, Anthropic, and SpaceX, potentially injecting over $4 trillion in new market cap into the stock market. Do you think these will drain everyone's liquidity for a while? How do you see these IPOs playing out?

Arthur Hayes:

I think these will be hard to perform well because the market's expectation isn't just normal trading; the market expects this to be an IPO—it needs to surge 50%, have a ridiculous pop to tell me the market still believes in AI, picked the right star company, and it will continue to soar. SpaceX's issuance market cap is around $1.8 trillion; it will directly become the world's seventh-largest company. For SpaceX to rise another 50%, it would have to be bigger than Amazon. If you read its S-1 filing, you'll see SpaceX trades at close to a 100x price-to-sales ratio. That's fucking ridiculous. It will be the seventh-largest company globally and has proven nothing.

Yes, it's a great idea—space data centers, avoiding policy issues of ground data centers; I acknowledge the logic makes sense. I follow a Substack called Semi Analysis; they do deep research on semiconductors and AI. They wrote an article comparing the fully loaded cost of space data centers vs. ground data centers. The conclusion: Currently, operating a data center in space costs four times as much as on the ground. Not only that, you don't have enough chips to realize Elon's vision, and there's still capacity to build on the ground. Building on the ground might not be as easy as you'd hope, but it's four times cheaper, so you'd build on the ground until you can't anymore. By the most optimistic estimates, space data centers won't reach true cost parity with ground until sometime in the next decade.

So the absurd reality now is that the entire network's capital is willingly paying a 100x price-to-sales ratio for a company whose product is four times more expensive than its competitors, whose rockets also explode, and which won't earn real money for the next decade.

And the worst part is, it's a classic crypto scam model: low float, high fully diluted valuation shitcoin. A 4% to 5% float, climbing to nearly 25% by September. Insiders will continuously dump on you from July to October, and it's trading as the world's seventh-largest company, having proven nothing on this data center thesis. Other than the satellite internet business, which is doing great, but that's not why you're buying SpaceX.

So I think this thing will have a hard time meeting market expectations. I'm not saying it will fall, but even if it rises 10%, the market reaction will be "This isn't good enough; I expected a 50%, 60%, 70% pop." That will make investors start questioning: Do I really want to bid for Anthropic or OpenAI's listing in September while SpaceX insiders are increasingly able to dump shares on the market?

By pricing it so high, they've created a situation where it's almost impossible to exceed expectations. If it were a $100 billion company, it could double or triple, and people would say AI is still valid, SpaceX soared because they went public at a lower market cap. But this is maximizing extraction—$1.8 trillion. To perform better than Nvidia? Very, very hard. Sorry, Elon, you can't beat Jensen. I don't know who Amazon's CEO is now, but you can't beat these companies either. These companies have real revenue, are operating, have proven their thesis. SpaceX's whole thing is still basically a napkin sketch. Given time, it might prove itself, but are you really going to push a $1.8 trillion stock up another 50%? It's really too hard. That's why I think this will be the kind of event that seriously shakes people's belief in the AI narrative, simply because it's too big and almost impossible to rise.

Host Kyle Chasse: How do you think liquidity will flow during these IPOs? Will it be a massive shift of funds? Or like Elon's style—whoever sells first sells best?

Arthur Hayes:

It's the first kind. People will get excited and pull liquidity from other assets. If SpaceX's performance disappoints, then I think Anthropic and OpenAI will face huge pressure to lower their issuance pricing. And once these two AI giants are forced to cut their valuation or scale down their fundraising just before listing, that sets an extremely deadly bad precedent in the market. It's essentially an official admission that the AI bubble has indeed been blown too big; we're proactively lowering future expectations. Suddenly, expectations are revised down, and people hesitate: Why did they lower their price after SpaceX? Why reduce the offering size? All these changes could cool investor enthusiasm. So it could be people pulling funds from elsewhere in the market, or it could be everyone just cooling down on the AI bull story, gradually exiting the market, triggering a chain reaction of price declines.

Evidence for an Anti-AI Strategy

Host Kyle Chasse: I want to return to the point about Trump's anti-AI narrative. Someone might argue that all those AI bigwigs are precisely the people who helped him get elected, at least significantly aided or influenced him. We know he's had many private dinners and discussions with them; they're his major donors and contributors, and he has publicly supported and praised AI.

I haven't calculated how many people publicly oppose AI; I know most people don't have warm, fuzzy feelings about AI, so this could indeed be a fairly smart pivot. But I've never heard anyone bring this up; it's a pretty bold prediction. How confident are you about this? Are there any signs that make you believe he might go this route?

Arthur Hayes:

I used Perplexity AI again. I asked it: Polymarket says Republicans will lose; is there a path to victory? You have to understand an underlying political logic first: Why is Trump so desperate to keep the House in the midterms? It's not for some lofty ideology; it's purely for his political self-preservation. If the House is taken by Democrats, for the next two full years, he and his entire family will be buried under mountains of Congressional subpoenas. Democrats can keep hounding him, harassing him continuously. He'll have zero chance to create any real legacy of what a "Trump second term" should be in his mind. That's why he wants to win, I think.

I also believe Trump has no ideology; he only cares about winning. During the 2020 pandemic, he provided the largest fiscal transfer to the American public since the New Deal—sending checks, everyone got them. He didn't screen by income thresholds; massive fraud, rich and poor got checks. So thinking he won't pivot to naked populism, directly catering to where public sentiment is going—and public sentiment is turning against AI. AI is generating negative sentiment among both Republican and Democratic voters. So I asked the AI: Assuming these seat projections are correct, first remove seats that are basically safe due to redistricting. But even then, they still need to flip some seats to keep the House.

So I asked: In all competitive, margin-of-error districts, are there any data center construction bans, or local legislation limiting data center construction impacts? Search all these districts for me. The result: If Trump goes anti-AI, it could be enough to flip enough seats for Republicans to win the House, because these districts have already demonstrated at a local level that residents simply don't want these data centers built where they live and have taken local action.

And again, it's all just rhetoric; Trump doesn't actually have to do anything. He can call Jensen and those AI bigwigs and say: "Listen, I'm going to come down hard on you for the next four months, don't panic. By November, none of this will happen." That's how he operates. He attacks them, stocks fall, some people lose money. Look at his play with tariffs; all his hedge fund buddies lost billions when he tried to substantially rewrite US trade infrastructure. He pulled back at the last minute, but at least he proved he was willing to try.

So I don't see why he wouldn't do it if his political strategists see an anti-AI stance generating enough votes, even if only rhetorically. The only victims are the stock market, and those losing money in stocks are just a bunch of rich people anyway. You don't even have to actually do anything because you're just talking; no bill will pass. After November, it's back to "We must win the AI race against China." So I think, given the inflation narrative is already locked in and unchangeable, this is a viable path for Republicans to win the election. I don't care if oil prices drop another 50%; gas prices might come down a bit, but too much stuff is already in the pipeline, and by October, prices on supermarket shelves will be higher, and Trump can do almost nothing about it.

The Fed, Waller, and Interest Rate Risk

Host Kyle Chasse: Let's talk about Waller. I know there's not much certainty yet because his first FOMC meeting as chair is next week. Based on some of his past statements and the proximity of the midterms, what do you think his policy orientation will be like?

Arthur Hayes:

I don't remember the specifics of his latest speech, but there's a narrative that you can see through the commodity inflation during wartime and believe in the AI productivity miracle leading to growth without inflation, therefore you can cut rates. I think this is the narrative the market is willing to believe about Waller. The unfortunate reality is oil prices are higher and won't come down in the near term. The two-year Treasury yield is currently about 60 basis points above the effective federal funds rate. The market is telling the Fed: You need to hike. That's the signal the market is sending to the Fed; whether they act, I don't know.

I also think Trump, privately, might soften his obsession with rate cuts because if he wants to do anything about the cost-of-living burden, the last thing he should do is have the Fed start cutting rates with inflation at 3.5% to 4%. If he genuinely cares about winning over some voters on affordability issues, cutting rates would actually cause him to lose badly in the midterms. So I think, given market positioning, it will be extremely difficult for Waller to cut. My base case is he holds steady; the question is the wording—hawkish hold or dovish hold? If it's a hawkish hold, hinting inflation pressures are building and the Fed might need to act in the future, the market will discount that: "They will hike at some point." And bubbles fear rising interest rates the most; the rising cost of capital always prompts people to leave the casino in some form.

So I think the chance of him cutting is very, very low; most likely he holds, and then it depends on the wording. The Fed has very few ways to support the bubble because oil prices have pushed the two-year yield above the effective fed funds rate; oil spikes, spreads widen, yields rise all the way. Currently, I see no room for Waller to cut. If rate cut expectations are one of the pillars supporting your optimism about the AI bubble and its continuation, I think you need to seriously question that assumption.

Crypto Catalysts and Re-entry Timing

Host Kyle Chasse: Between now and the midterms, do you think there could be any events that give the market a short-term breather or rebound? I don't mean market manipulation, but any narrative or something happening that could bring some kind of bounce from now until year-end?

Arthur Hayes:

Maybe people believe MicroStrategy will somehow keep pumping, etc., that might reignite some bullish sentiment, but I really don't see much money printing happening, and even if there is, it goes directly to AI construction. So I don't see any huge positive catalyst that could pull crypto out of this slump, or at least make it outperform relative to AI. Because if we return to the perfect economic bed of high growth and low inflation, what would you buy? Would you buy Nvidia or Bitcoin? You'd absolutely choose Nvidia, Samsung, right? Because they've gone up 50x in two years or something. Would you buy Bitcoin? Of course not. That's the problem; AI is performing too well. If the environment is the same, and these things keep performing well, why would you choose crypto? You'd just keep betting that capex grows at 100% annually forever and keep buying these companies. Do you think that's sustainable?

And that's precisely the current market belief. But if I'm an institutional investor and a client says "The Nasdaq is up 50%, why are you only up 10%?"—"Because I'm hedging; I bought volatility or something." The client would say: "Why should I give money to this fund manager who only gained 10% instead of investing in that one that gained 50%?" That's the logic that consumes everyone—everyone's saying "I want to maximize returns; why aren't you in it?" That's the problem.

Host Kyle Chasse: When would you consider re-entering? What could convince you to come back?

Arthur Hayes:

If by fall, oil prices behave mildly, not spiking much, and Trump doesn't turn on the AI barons, then I might re-enter the market and see where there's value. But all of this has an extremely stringent prerequisite—that in the coming months, the SpaceX, Anthropic, and OpenAI IPOs must be massively successful, must even have the most incredible, explosive pops in human history to match the largest IPOs in human history. When reality doesn't match expectations, we're in trouble.

Host Kyle Chasse: Is there a way to gauge when the crypto market might see its next bull run?

Arthur Hayes:

We need to see more money printing, and that printed money not all flowing to AI. When will that happen? I don't know, but I don't think it's happening now. You often say that no matter what, the only way governments get out of the mess they create is by printing money; it's inevitable. Is there a way to gauge the timeline or the catalyst that triggers this? If the AI bubble truly bursts, some financial institutions collapse, etc., you'll get a bailout. When? I don't know. But that's when crypto can outperform—AI is credit-impaired, not that it ceases to exist, but it's not flying high anymore, so investors need to trade something else. I hope that something else is crypto, and then liquidity will flow back to crypto.

I absolutely believe the answer is always printing money; the question is the timeline. Bitcoin is the best-performing asset in human history over the past 15 years. But unfortunately, many people didn't get in at 1 cent; they bought at other prices. If you entered during the ETF era, on average, you're losing. Everything depends on path dependence and when you entered. Just because you entered six months ago doesn't mean Bitcoin should rise for you. I think this is a painful lesson many people need to learn.

Quickfire Q&A

Host Kyle Chasse: Finally, a few quickfire questions. First, Bitcoin above or below $100k by year-end?

Arthur Hayes:

Below.

Host Kyle Chasse: When is the altcoin season coming?

Arthur Hayes:

We just had an altcoin season, just four assets. People made a lot of money on HYPE and some others, so I think we just had it; maybe it'll come again, but I don't know.

Host Kyle Chasse: Do you think you'll buy back HYPE before year-end?

Arthur Hayes:

Yes.

Host Kyle Chasse: If you put $1 million into an asset today—Bitcoin, HYPE, short-term Treasuries, gold—what would you choose?

Arthur Hayes:

ExxonMobil.