Arthur Hayes: AI Drains Market Liquidity, Bitcoin Unlikely to Reach $100K by Year-End

Compiled & Translated by: Odaily TechFlow

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

Air Date: June 10, 2026

Key Takeaways

Arthur Hayes has liquidated his largest crypto positions — HYPE, NEAR, Worldcoin, and Zcash. The reason isn't crypto itself, but a macro chain of reasoning spanning oil prices, the Iran conflict, Trump's midterm election strategy, and the AI bubble bursting. He believes Trump, to salvage the midterm elections, might pivot to attack the AI industry. Once the AI bubble peaks, the crypto market cannot remain unaffected. SpaceX's IPO at a $1.8 trillion valuation and 100x price-to-sales ratio, in his view, is a liquidity time bomb set to explode.

Key Insights Summary

Why Liquidate Everything

• "Voters don't like high oil prices; they don't like energy-driven inflation."
• "The higher the oil price, the more eager everyone is to negotiate. Then the price drops, and suddenly no one wants a deal."

Trump's Pivot Against AI

• "If he wants to pull a rabbit out of his hat, the only issue he can flip is AI — temporarily borrow the Democrat's rhetoric, say he wants to protect the American people from AI, and then everyone forgets it was the Republicans who financed all this."
• "The most devastating thing for the AI narrative is taxation and regulation."

New Portfolio Allocation

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

The Math of the AI CapEx Bubble

• "I trade based on feel and intuition, not too much on analysis. I feel we are in some phase of the AI bubble; I'm just not sure which one."
• "You can't pay 100x sales for SpaceX or any AI company when both earnings and capital expenditure are decelerating. The key is how fast growth is, the rate of change, and your perception of that rate of change."
• "When you invest in AI, you're not investing in earnings; you're investing in the construction of data center capital expenditure — 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 reached $800 billion in CapEx in 2026. By 2027, this second derivative will start to decelerate — you can't pay 100x sales for SpaceX or any AI company when both earnings and spending are decelerating."
• "There's always conflict between capital and labor, whether voluntary or forced, and at some point, some agreement will be reached."

Why Bitcoin Underperformed AI

• "Since the commercialization of ChatGPT, the US M2 has increased by about $1.5 trillion, but in the same period, AI and AI-related companies issued about $1.5 trillion in debt — with $1.3 trillion concentrated in 2025 and 2026. AI sucked up all the excess liquidity."
• "When the bubble bursts, all correlations go to 1 — AI drops, Bitcoin drops, all assets drop together until the dust settles, and then specific assets start to outperform."
• "Over the next six months, due to rising oil prices and US politics, there will be a major correction in the AI complex, and Bitcoin will not be spared."

The SpaceX IPO Trap

• "The market doesn't expect it to trade normally; it expects this IPO to pop 50%, to have some absurd rally, to tell me the market still believes in AI, picked the right star company, and it will continue to the moon."
• "With an issuance market cap around $1.8 trillion, SpaceX would instantly become the seventh-largest company in the world. SpaceX is trading at nearly 100x price-to-sales. This is fucking absurd — it will be the seventh-largest company in the world and has proven nothing."
• "This is a classic crypto scam pattern: low float, high fully diluted valuation, 4% to 5% float, climbing to nearly 25% by September — insiders will keep selling to you from July to October."

Evidence for an Anti-AI Strategy

• "I asked Perplexity AI to search in all competitive districts for any legislation on data center construction restrictions or local opposition. The result: if Trump goes anti-AI, it's enough to flip enough seats to keep the House."
• "Trump has no ideology; he just wants to win. He wrote checks to every American in 2020 — that's the purest form of direct money printing. So don't think he won't pivot to raw populism."

The Fed, Warsh, and Interest Rate Risk

• "Oil is higher and won't come down soon. The 2-year Treasury yield is currently about 60 basis points above the effective federal funds rate. The market is telling the Fed: you need to raise rates."
• "What bubbles fear most is rising interest rates. The rising cost of capital always, in some form, drives people away from this casino."
• "Currently, I don't see any room for Warsh 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 many signs of money printing, and even if there is, it goes straight to AI construction."
• "If we return to the perfect economic sweet spot of high growth and low inflation, what would you buy? Would you buy Nvidia or Bitcoin? You'd unequivocally choose Nvidia, choose Samsung, right? Because they went up 50x in two years. Would you buy Bitcoin? Of course not."
• "That's when crypto can outperform — AI is discredited, not dead, but it's not skyrocketing like before, so investors need to trade something else. I hope that something else is crypto, and then liquidity flows back into crypto."

Quick Fire Round

• "Bitcoin above or below $100k by year-end? — Below."
• "If you had to put $1 million into any asset today — Bitcoin, HYPE, T-bills, Gold? — Exxon Mobil."

Why Liquidate Everything

Host Kyle Chasse: Arthur, welcome back. Recently, you sold all your Zcash, HYPE, and NEAR. Everyone is accusing you of exiting a scam, pumping and dumping, etc. Why did you sell everything? What's going on?

Arthur Hayes:

I just published an article called "Reality Check," about five thousand words, outlining the thesis I'll summarize in a few minutes on this podcast. If you want a deeper dive into my reasoning, I highly recommend reading it on my Substack. But essentially, the core is a reflexive interaction between oil prices and Trump's midterm election campaign rhetoric — he needs to help the GOP beat the Democrats in November to keep the Senate and House. The issue is the ongoing Iran conflict — whether you like it or not, it's here, it's now.

So Trump and the Iranian Revolutionary Guard Corps need some deal to end this conflict. Both sides face 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, don't like energy-driven inflation. Iran faces pressure from China and other developing countries — "What the hell are you doing? We need this oil, these goods 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. Then the price drops, and suddenly no one wants a deal. So we've been oscillating back and forth for about three months, or for as long as the war has been going on.

As this process continues, we are literally depleting commercial and national stockpiles of oil and other hydrocarbons. Pick any energy analyst; their charts differ but the conclusion is the same — pre-war inventories were ample, so people believed in an oil and gas glut, leading to relatively low prices. But we are now consuming these surpluses at an accelerating rate. At some point, we'll hit a level — I don't know how many billions of barrels, each analyst has their own number and estimated date. Once that date passes, things will get very, very ugly very quickly. And the only way to rebalance the market is to push oil prices up fast.

That's the worst case — no deal between Trump and the IRGC. By October this year, the Strait of Hormuz remains effectively blockaded, with only 25% to 30% capacity getting through, far from enough. The more likely scenario is a deal maybe a month or two from now, and shipping through the strait resumes to some degree. But then everyone needs to rebuild inventories. You must rebuild national reserves, and you'll hoard even more than before — because you just experienced being completely at the mercy of Trump and a bunch of Iranian generals deciding whether your country receives goods. So you'll think: "I need to stockpile more oil, gas, helium, everything needed to run a modern economy." This creates additional demand. It might not push prices to the catastrophic scenario highs, but it still means oil, gas, and other commodity prices in three or four months will be higher than today.

The Link Between Oil, War, and Elections

Arthur Hayes:

Following this logic, during these midterm elections (November 2026), Trump and his GOP allies are highly likely to lose the House. If you check Polymarket now, the odds of Democrats retaking the House have surged to 82%.

Why is that? Trump is clearly being hammered on the cost of living issue. People feel inflation is bad and getting worse. In the public's eyes, the GOP is in power at the White House, and they instigated this damn conflict and war, so the blame falls on them. That's why everyone thinks they will lose, and lose badly.

The problem is you can't do much about inflation in the short term — policies have 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 pump. Trump has no Jedi mind trick to make people believe inflation doesn't exist — it does, and they see it every other day when they fill up. So what other issue can stir the entire American political spectrum? The answer is AI data centers — surrounding regulation, taxation. I think the Democrats are finding a great campaign message: stop building data centers, tax the AI giants, regulate AI. Because not only will poor people lose jobs, but rich people's jobs will also be replaced by AI — at least that's the fear.

Trump's Pivot Against AI

Arthur Hayes:

If you, as the opposition party, can exploit that fear, you have two powerful messages: one is the terrible inflation caused by the GOP's war, and the other is the AI building boom essentially endorsed by GOP politicians. So my theory is, if Trump wants to pull a rabbit out of his hat, the only issue he can potentially flip his stance on is AI. Borrow the Democrat's megaphone and say: "We need to increase scrutiny on data centers, we need to establish an AI national dividend, tax them." That's the Trumpian rhetoric. He can say a lot of things; whether he follows through after November is another matter. I think this is their only viable path to winning — positioning themselves as the party protecting Americans from AI, and then people will forget it was the GOP who financed it all, because people have short memories. So I see this as 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 IRGC. The longer the war drags on without a solution, the more we accumulate commodity pressure that will eventually cause prices to spike, and the more likely Trump is to take a swing at AI in an attempt to win the election, or at least help the GOP keep the House. Obviously, what's most devastating for the AI narrative is taxation and regulation. We already saw in Korea, a politician suggested an AI national tax, and Cosby hit its daily limit down that same day. So I think, if this kind of rhetoric starts being openly promoted by the ruling party, especially by Trump, you'll see the AI bubble peak, at least for the next few months until the election, and this will drag the crypto market down with it. That's the core thesis. I really didn't want to think about this anymore, so I liquidated my entire portfolio in the latter part of last week.

New Portfolio Allocation

Host Kyle Chasse: Where is most of your liquid capital now, cash or Treasuries?

Arthur Hayes:

Treasuries and energy stocks.

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

Arthur Hayes:

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

The Math of the AI CapEx Bubble

Arthur Hayes:

I trade based on feel and intuition, not too much on analysis. I feel we are in some phase of the AI bubble; I'm just not sure which one. I listened to a podcast by Marco Papovich, a strategist at BCA, who has a great YouTube channel called Geopolitical Cousins. Highly recommend subscribing. He made an important point: when you invest in AI, you're not investing in earnings; you're investing in the construction of data center capital expenditure. I often forget this too: you're betting on the second derivative, the acceleration or deceleration of the trend. If the trend is accelerating, you're willing to