Arthur Hayes Predicts a Major Crypto Bull Run Amid Global Liquidity Shift

Written by Arthur Hayes, Co-founder of BitMEX

Compiled by Saoirse, Foresight News

As the early signs of a bull market gently soothed my emotions, a captivating sense of anticipation enveloped me. I happily clicked the buy button, aware that speculative fervor would propel my portfolio to new highs—until the herd of enthusiastic market participants snapped out of their dreamlike delusion and tempered their optimism for a brighter future, allowing market gravity to once again dictate financial trends.

This round, market proponents paint a future where AI agents flourish, generating seemingly endless economic wealth. New tech elites in China and the U.S. have become the controllers of this new era, building the foundational infrastructure upon which AI depends. They occupy the bustling tech hubs of San Francisco and Hangzhou, with their companies absorbing all available market capital, striving to create an ideal society on earth—at least for corporate shareholders and governing systems. As capital becomes increasingly scarce, they exert pressure on current political authorities to increase the issuance of U.S. dollars and renminbi, further solidifying their industry influence.

Flocking to build an AI utopia is not the only frenzy today. Another group is eager to construct a global war machine. Why should the international order dominated by the United States be the sole source of conflict and turmoil? Major powers all require top-tier military capabilities to eliminate hostile forces, as no one can rely on unpredictable foreign leaders to come to the aid of so-called allies. Thus, it is only natural for nations to print money to build armaments and conscript young people to fight in a so-called war of glory, whose purpose remains unclear.

And we have all become losers of our time: investing far too little in the production of essential goods, while obsessively chasing bonds and stocks within the imperial system. Once geopolitical conflicts disrupt global trade routes, the dollar savings in our hands become uncertain in value. Outsourcing all production of essential goods could ultimately lead to famine and social unrest. The common people will eventually take to the streets to defend their rights, exposing the hypocrisy of arrogant politicians.

In the eyes of politicians and their affiliated bankers, there are three undeniable reasons supporting central banks and commercial banks to engage in unrestrained money printing and liquidity flooding. The catalyst for accelerating credit disbursement is the ongoing escalation of the U.S.-Iran conflict. This dispute is merely another tragic replay of death and destruction driven by ideological differences among those in power, while also clearly demonstrating that AI and drones will dominate the future battlefield—and no country can rely solely on the U.S.-led international order to ensure the stable flow of global commodities.

In the AI race, China and the U.S. share a strong consensus: they must secure the highest ground in AI development within their own borders, or face long-term strategic disadvantage. Therefore, AI hegemony is directly tied to national security. For other countries, to ensure stable access to food and energy under any circumstances, they must redundantly build infrastructure such as transportation networks and stockpile fertilizers, food, and energy resources—rather than solely increasing holdings of U.S. Treasuries and U.S. stocks.

Before the next U.S. presidential election in 2028, intertwined multi-generational issues will generate a political consensus favoring loose monetary policy and unchecked expansion of fiat credit. This round of the crypto bull market officially began on February 28, following U.S. airstrikes on Iran.

May this message awaken your bullish conviction, enabling you to break free and fly toward a profitable future. Meanwhile, millions of people around the world are suffering hunger and deprivation due to war disrupting the flow of essential goods, overlooked in the shadows of mainstream media.

Global capital expenditures on training and inference for AI models and agents have reached an unprecedented scale in human history. Many believe that the societal value created by this AI industry investment will far surpass that of any previous technological revolution. I agree, but human nature has always been prone to excessive enthusiasm. There is no such thing as eternal perfection; people inevitably overextend expectations, overinvesting and duplicating efforts for an AI-dominated future.

AI advocates use nationalism to justify massive industrial investments, masking the inefficiency and waste of capital under the guise of national strategy. Patriotism should not be priced or measured. Leaders in both China and the United States firmly believe that AI and technological hegemony are vital to maintaining their respective systems of power. Tech professionals in both countries also gladly amplify narratives of rivalry, exaggerating the threats posed by their rivals’ perceived leadership in AI.

Objectively, both nations' leaders have witnessed firsthand how the large-scale application of AI and drones can determine the outcome of battles, and they have fully embraced this logic of industrial competition. For this reason, both countries have made the development of cutting-edge AI industries a top priority in both economic and military domains. This means that even if monetary policymakers are concerned that massive dollar and renminbi credit expansion could trigger inflation, they cannot voice opposition. Central banks and commercial banks must unconditionally provide the capital needed by the technology sector.

Currently, most AI capital expenditures in the United States are funded by the operating cash flows of leading profitable tech companies.

However, the current and future scale of industry investment already requires expanding capital supply through credit channels.

In China, policy has compelled banks to reduce credit allocation to the real estate sector and redirect it toward the technology industry.

In addition to capital investment in data centers, both China and the United States are continuing to expand their power generation capacity.

This is no longer simply about commercial banks extending loans to AI and data center projects out of so-called patriotic duty. The Federal Reserve and the People’s Bank of China are both increasing the issuance of fiat currency and significantly easing liquidity conditions in financial markets.

The political push to dominate the AI sector, combined with the financial demand for money printing and credit support to drive industrial growth, has created an ideal upward environment for cryptocurrencies. The total supply of fiat currency will only continue to increase, and as annual capital expenditures on AI and power infrastructure surge, the pace of monetary expansion will accelerate further.

As the cost of individual AI computing power continues to decline, the complexity of models and scale of tasks that AI agents can handle are continuously increasing, leading to exponential growth in computing consumption—this is the core essence of Jia Wan's Paradox. Coupled with the Red Queen Effect—where a company’s substantial investment in iterating AI models is quickly overtaken by competitors’ technological advancements, causing early investments to rapidly depreciate.

This forces the industry into endless capital competition, compelling companies to continuously increase spending on cutting-edge model development to outpace competitors, ultimately putting trillions—and potentially tens of trillions—of dollars in investment at risk of losing value. Affected by these factors, unless confronted by an unexpected external market black swan event, the expansion of AI capital expenditures will be relentless.

When will this industry frenzy come to an end?

I believe two events will occur almost simultaneously, fundamentally shifting market perceptions about the necessity of trillion-dollar investments in AI: First, an unprecedented large-scale IPO or mega-merger in the U.S. and China’s tech and AI sectors, with wildly unsustainable financial logic, will exceed market capacity and shatter the industry’s frenzy. At that point, people will finally begin questioning whether pouring massive funds into AI development truly delivers value. Once this skepticism becomes consensus, the industry bubble will burst.

Second, the campaign rhetoric of the Democratic challenger in the 2028 U.S. election. Large-scale AI infrastructure will drive up costs for raw materials, labor, and especially electricity—factors that are highly unpopular across many regions of the United States. Additionally, nine out of ten ordinary Americans do not hold significant amounts of stock and thus cannot benefit from the price increases of AI-related companies.

Therefore, a campaign platform emphasizing opposition to uncontrolled AI expansion, a return to human value, and curbing infrastructure inflationary effects is likely to gain strong public support. Even if the Democratic Party ultimately loses, this prevailing public sentiment will cause financial institutions to anticipate that future governments may implement policies to restrict AI-related credit lending, strengthen industry regulation, and suppress profit expectations for related companies.

For now, liquidity in the U.S. dollar and renminbi markets will remain ample, continuing to benefit Bitcoin and the broader cryptocurrency industry.

Trump launched a hasty airstrike on Iran, completely disregarding the impact of the conflict on the global economy. Perhaps he did not act without consideration, but the optimistic expectation that this military action could achieve a quick victory this year is clearly detached from reality.

The United States benefits from abundant energy and arable land resources, so even if prices rise, its citizens will not face the risk of famine—true crisis arises only when politicians prioritize military spending over social welfare. People in most of Europe, Africa, and Asia do not enjoy this same advantage.

The elites in these countries previously misjudged the situation, naively assuming that the United States would consider the plight of nations suffering from global food and energy shortages and would not recklessly initiate a war in the Middle East or disrupt commodity supply channels.

Previously, countries overly relied on the U.S.-led order, increasing their holdings of U.S. dollar-denominated financial assets while neglecting to build their own energy transportation channels and trade routes, and failing to stockpile essential civilian supplies for emergencies.

Marco Papic of BCA Research summarized it succinctly: This poses a significant risk to countries worldwide, as the global infrastructure landscape has long been deeply intertwined with America’s geopolitical dominance. Looking globally: Germany’s air defense system struggles to counter Russian threats due to its reliance on U.S. defense; most Gulf Cooperation Council nations lack alternative energy transportation infrastructure and are forced to depend on the Strait of Hormuz, a consequence of the U.S.-led order; global manufacturing is highly concentrated in China, reflecting a deliberate design within the U.S.-driven global framework; Australia’s aviation fuel must be imported from South Korea, constrained by U.S.-dominated supply chains; and Canada’s infrastructure system is heavily dependent on U.S. market demand, again rooted in the U.S. hegemonic structure.

Global physical infrastructure in energy, defense, shipping, manufacturing, and other sectors has been designed from the outset to align with U.S. geopolitical dominance. This is evident not only in the United States’ long-standing large current account deficit—underpinned by an imperial economic structure that indiscriminately absorbs imports from countries worldwide—but also in the global reliance on massive U.S. defense spending to sustain the overall geopolitical order. In short, the current global operating system is led by the United States, which will fight to defend it.

Bangladesh may face famine due to disrupted fertilizer exports from the Persian Gulf and reduced food production; Australia, cut off from fuel imports from China, must urgently purchase fuel from Singapore; European citizens are forced to abandon cheaper Russian and Qatari oil and gas resources and turn to more expensive American refined oil and liquefied natural gas.

All of this means that the sovereign investment logic of nations will undergo a complete transformation. When a war unrelated to and unacknowledged by a country can disrupt food and energy supplies, holding U.S. Treasuries or S&P 500 index funds loses its meaning. To address strategic vulnerabilities, countries will gradually reduce their holdings of dollar-denominated assets and redirect capital toward infrastructure development, defense positioning, and essential commodity reserves.

The U.S. hegemonic system relies on capital inflows from abroad to balance its own accounts. Since foreign capital holds vast amounts of U.S. dollar assets, a coordinated sell-off would directly destabilize U.S. financial markets. The United States has long depended on foreign capital to finance its massive current account deficit; if a sell-off spiral gets out of control, it could easily trigger a severe financial crisis.

U.S. Treasury Secretary Bessent and monetary policymakers are well aware of this; currently, two policy tools can alleviate the crisis: expanding the scope of dollar swap lines and adjusting bank regulatory rules to compel financial institutions to increase their holdings of U.S. Treasuries.

If friendly nations require funding to secure essential goods and infrastructure, the Federal Reserve or the Treasury can provide financing through dollar swap lines, without directly selling dollar assets and disrupting markets—effectively borrowing liquidity against existing assets as collateral. The UAE, for example, has previously requested dollar swap lines on this basis. The implementation of such credit facilities would, in essence, further expand the total supply of dollars in circulation.

Passive Australia: Forced to sell U.S. Treasuries to buy jet fuel

Smart Australia: Borrow dollars from the Federal Reserve to purchase aviation fuel

If the U.S. market needs to hedge against sustained selling pressure from foreign countries, it could adjust banking regulatory rules to allow banks to hold more U.S. Treasuries and U.S. equities under the same capital requirements. Refining the supplementary leverage ratio regulations is precisely a step in this direction.

The global practice of allocating trade surplus surpluses into U.S. dollar assets began with the 1970s U.S.-Saudi oil-dollar agreement and reached its peak after the 1997–1998 Asian financial crisis. However, today, holding U.S. dollar assets no longer guarantees stable access to essential goods such as fertilizer and oil.

Countries need to focus on building domestic production capacity or collaborate with neighboring nations to establish supply chains, ensuring the availability of essential goods. The era of precisely calibrated, global just-in-time logistics has come to an end; the era of strategic stockpiling for unforeseen needs has officially begun. This will become a long-term structural trend lasting decades.

This also means that U.S. monetary policy will need to maintain a more accommodative liquidity environment than usual to offset the market gap created by other countries reducing their dollar asset holdings and shifting toward physical infrastructure and material reserves.

War inherently has inflationary characteristics, and the U.S.-Iran conflict is no exception. Investments in AI infrastructure, global strategic reserves, and infrastructure booms have all become justifications for central banks and commercial banks to expand credit lending. Politicians, driven by practical needs and subjective considerations, tacitly approve or even support unchecked money printing.

This is also the primary reason why Bitcoin has consistently outperformed gold, U.S. tech stocks, and other major risk assets since the outbreak of hostilities on February 28.

Performance of Bitcoin (gold), Nasdaq 100 Index (magenta), U.S. Investment-Grade Tech ETF (white), and Gold (orange) post-war

Bitcoin fell to $60,000 this year, and with massive amounts of pending U.S. dollar and Renminbi liquidity, a return to $126,000 is an inevitable trend.

Many bearish investors still refuse to participate in this Bitcoin rally, as its performance over the past two years has significantly lagged behind tech stocks and gold. Many even question whether Bitcoin still holds value as a hedge against currency debasement. But the market will ultimately recognize its irreplaceable sensitivity to fiat liquidity expansion.

I anticipate that after Bitcoin breaks through $90,000, its upward momentum will accelerate sharply, entering an explosive phase; at that point, a large number of option sellers will be forced to close their positions en masse as prices breach strike levels, further fueling the rally. I cannot predict how high Bitcoin will ultimately rise—unless a disruptive market shift occurs, I will maximize my Munster portfolio’s risk exposure.

As the U.S. midterm elections in November approach, political tensions surrounding the AI industry and inflation will intensify, potentially causing minor fluctuations in the bull market. However, upon closer examination, the negative impact of high oil prices on Trump is far less significant than commonly perceived.

California has long suffered from flawed energy policies and among the highest oil prices in the U.S., making it inherently difficult for Republicans to win there; however, a $100 oil price and the reconstruction of energy industries in the Middle East and Venezuela would benefit the oil and gas regions that form Trump’s electoral base.

Poll predictions show the Democratic Party has a 50% chance of gaining control of both the House and Senate, but even amid U.S.-Iran tensions, Trump still has ample time to win over moderate voters and sway public opinion. As long as real household incomes continue to rise steadily, he will gain broad support. Unlocking oil and gas production and developing the energy sector could propel the S&P 500 toward the 10,000-point mark.

Now is the perfect time to position yourself in under-the-radar, high-potential tokens. In addition to our heavy positions in Hyperliquid (HYPE) and Zcash (ZEC), I’m currently most bullish on NEAR.

In my next article, I will elaborate on the logic: combining the privacy narrative with NEAR’s intelligent intent ecosystem will generate positive cash flow for the protocol, completely reversing the long-term stagnation of the token and driving a sharp rally toward a rapid breakthrough of its all-time high.

In a bull market, simply invest confidently and hold firmly. There will always be a time to sell and exit in the future, but it’s not now. Go with the trend and capitalize on the market’s momentum.