Wartime money printing presses are running wild, hot money is flooding the market! Arthur Hayes: Bitcoin to hit $125,000 by year-end

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Arthur Hayes, co-founder of BitMEX and current CIO of the crypto family office Maelstrom, predicted at the "Bitcoin 2026" conference that a massive wave of liquidity is poised to flood the financial markets, driven by surging wartime defense spending and the easing of U.S. banking regulations. He expects Bitcoin to soar to $125,000 by the end of this year. 3 Major Forces Reshaping the Credit Environment In his speech, Arthur Hayes elaborated on his outlook for the economy. He believes the current credit environment is being reshaped by three major forces: the wave of unemployment triggered by AI, the transition of the Fed Chair, and the structural shift of U.S. commercial banks absorbing government debt. He stated: "My outlook has become more bullish, and there is a reason for it. Now is the time to think carefully about 'money printing' and what it actually means for Bitcoin." Regarding the geopolitical risks of the recent U.S.-Iran conflict, Arthur Hayes mentioned that he monitors the spread between the front-month and 6-month WTI crude oil futures every morning to determine if commodity flows are normal. He believes that while the current market environment is under pressure, it is not enough to trigger a sell-off in risk assets. He added: "The price trend of the front-month contract shows that, yes, things are a bit bad, but not 'super-duper bad' yet, so I can ignore it for now and focus on other more important things." AI Sparks High-Paid White-Collar Unemployment, "Invisible Credit Deflation" is Quietly Unfolding In his speech, Arthur Hayes presented a highly controversial view, arguing that the wave of unemployment brought about by AI technology has already triggered an "invisible credit deflation," yet central banks remain oblivious. He displayed a chart comparing the performance of Bitcoin since it hit an all-time high last October: during this period, Bitcoin plummeted by about 50%, while the Nasdaq index remained rock solid. He believes the culprit for this divergence is the decline of Software-as-a-Service (SaaS) companies. The revenues of these companies are being devoured by AI tools that cost only a fraction of the price. Arthur Hayes analyzed: "These SaaS stocks have been beaten up badly, which signals a credit deflation event. Because central banks haven't noticed this, they haven't printed enough money, and Bitcoin has naturally suffered as a result." He even described AI as a "new type of subprime mortgage crisis." Those high-paid, knowledge-based white-collar workers who rely on commercial bank loans to buy homes and cars represent hundreds of billions of dollars in massive credit exposure; these potential default risks are not yet reflected on bank balance sheets. Arthur Hayes joked to the audience: "I wish I could fire my accountant and lawyer right now and replace them all with Claude (AI assistant). But doing so would be an absolute disaster for those financial institutions that lend to high-paid white-collar workers." Wartime Economy Activated! Bitcoin Smells the Blood of "Surging Inflation" However, this deflationary logic underwent a dramatic reversal after the U.S.-Iran conflict broke out at the end of February this year. Since then, Bitcoin has begun to significantly outperform the Nasdaq and SaaS stocks. Arthur Hayes believes this indicates that the market is repricing—shifting from worrying about "AI deflation" to fearing "wartime inflation." He said: "Bitcoin is now reflecting 'wartime inflation.' The U.S. and many other countries have admitted they are in a state of war, defense spending is far from sufficient, and the only way out is to print more money to build missiles. So what changes next?" Regarding market concerns that the new Fed Chair, Kevin Warsh, might lean "hawkish (tending toward tight monetary policy to combat inflation)," Arthur Hayes was dismissive. He explained that Kevin Warsh must work hand-in-hand with Treasury Secretary Scott Bessent to maintain order in the bond market while the government continues to issue debt: "Kevin Warsh cannot go against Scott Bessent. At the end of the day, the U.S. has issued as much as $38 trillion in national debt, and the government needs money to operate. The Fed will eventually listen and ensure market order is stable so that everyone is willing to keep buying U.S. Treasuries." Arthur Hayes further broke down the "asset swap" play between the Fed and commercial banks: banks will convert the approximately $3 trillion in Fed reserves they hold into U.S. Treasuries and repurchase agreements. On the surface, the Fed has shrunk its balance sheet, but in reality, the liquidity within the system has not decreased at all. Banking Regulation Easing: A $4 Trillion Credit Frenzy is Coming The final piece of the puzzle supporting Arthur Hayes' bullish outlook is

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