Arthur Hayes: AI Is Draining the Market, Bitcoin Unlikely to Hit $100K by Year-End

Compiled & Translated by: DeepTech Flow (Shenchao 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 closed out his largest crypto positions – HYPE, NEAR, Worldcoin, and Zcash – for reasons unrelated to crypto itself. Instead, it's based on a macro chain of reasoning spanning oil prices, the Iran war, Trump's midterm election strategy, and an AI bubble burst. He believes Trump, to salvage midterm losses, might reverse his stance and attack the AI industry, and once the AI bubble tops, the crypto market won't be immune. Furthermore, SpaceX's IPO at a $1.8 trillion valuation and a 100x price-to-sales ratio looks like a ticking liquidity time bomb to him.

Highlights Summary

Why He Liquidated Everything

• "Voters don't like high oil prices, they don't like the inflation driven by energy."
• "The higher the oil price, the more eager everyone is to negotiate, then the price drops, and suddenly nobody wants a deal."

Trump Shifting to Anti-AI

• "If he wants to pull a rabbit out of his hat, the only issue he can flip is AI – temporarily take the Democratic microphone, say he's protecting Americans from AI, and everyone will forget that the GOP financed it all."
• "The most destructive thing to the AI narrative is taxation and regulation."

New Investment 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 market's willingness to pay forward multiples for that growth will decline, so the prices of these assets will fall."

The Math of the AI Capital Expenditure Bubble

• "I trade by feel and intuition, not much analysis. I feel we're 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 capex are decelerating. The point is how fast the growth is, the rate of change, and your perception of that rate."
• "When you invest in AI, you're not investing in earnings, you're investing in the capex buildout of data centers – you're betting on the second derivative, the acceleration or deceleration of the trend. If the trend is accelerating, you'll pay infinite multiples for forward revenue; if it's decelerating, you won't."
• "We're already at $800 billion in capex in 2026. By 2027, this second derivative will start to decelerate – you cannot pay 100x sales for SpaceX or any AI company when both earnings and spending are slowing down."
• "There will always be conflict between capital and labor, whether voluntarily or forced, at some point an agreement must be reached."

Why Bitcoin Underperformed AI

• "Since the commercialization of ChatGPT, US M2 has increased by about $1.5 trillion, but over the same period, AI and AI-related companies issued about $1.5 trillion in debt – $1.3 trillion concentrated in 2025 and 2026. AI has sucked up all the excess liquidity."
• "When a bubble bursts, all correlations go to 1 – AI drops, Bitcoin drops, everything drops together, until the dust settles and certain assets start to outperform."
• "In the next six months, due to rising oil prices and US political factors, there will be a major correction in the AI complex, and Bitcoin won't be spared."

The Trap of the SpaceX IPO

• "The market's expectation isn't that it trades normally; the market expects an IPO that jumps 50%, a ridiculous gain, to tell me the market still believes in AI, picked the right star company, and it will continue to soar."
• "With SpaceX's issuance market cap around $1.8 trillion, it would become the seventh largest company in the world. It's trading at nearly 100x price-to-sales. It's fucking absurd; it's the seventh largest company globally and has proven nothing."
• "This is a classic crypto scam pattern: low float, high fully diluted valuation, 4% to 5% float, rising to nearly 25% by September – insiders will be dumping on you from July to October."

Evidence for the Anti-AI Strategy

• "I asked Perplexity AI to search all competitive districts for any legislation regarding data center construction restrictions or local opposition. The result: if Trump moves against AI, it's enough to flip enough seats to keep the House."
• "Trump has no ideology; he only cares about winning. He sent checks to every American in 2020 – the purest form of direct money printing. So don't think he wouldn't turn to blatant 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 hike."
• "The one thing a bubble fears most is rising interest rates. A rising cost of capital always, in some form, forces people to leave the casino."
• "I don't see any room for Warsh to cut rates right now. If the expectation of rate cuts is 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 don't really see many signs of money printing, and even when it happens, it flows directly to AI buildout."
• "If we return to that perfect economic Goldilocks zone of high growth and low inflation, what would you buy? Would you buy Nvidia or Bitcoin? You'd buy Nvidia without hesitation, Samsung, right? Because they went up 50x in two years. Would you buy Bitcoin? Of course not."
• "That's the moment crypto can outperform – when AI has been credit-crunched. Not that it ceases to exist, but it's no longer skyrocketing like before, so investors need something else to trade. I hope that something else is crypto, and then liquidity flows back into crypto."

Quick-Fire Questions

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

Why He Liquidated Everything

Host Kyle Chasse: Arthur, welcome back. Recently, you sold Zcash, HYPE, and NEAR. Everyone is accusing you of being a 'rug pull' or 'pump and dump.' Why did you sell everything? What's going on?

Arthur Hayes:

I just published an article called 'Reality Check,' about 5,000 words, detailing the thesis I'll explain in a few minutes on this podcast. If you want to dive deeper, I highly recommend reading it on my Substack. But at its core, it's about a reflexive interaction between oil prices and Trump's midterm campaign strategy – he needs to help the GOP defeat the Democrats and keep the Senate and House in November. The problem is the current war with Iran – whether you like it or not, it's there, it's here, it's now.

So, some agreement between Trump and the Islamic Revolutionary Guard Corps (IRGC) is needed to end the conflict. Both sides have a practical constraint: the oil price determines how angry different parts of the world are at each party. Trump must worry about domestic issues – voters don't like high oil prices or the inflation driven by energy. Iran faces pressure from China and other developing nations: 'What the hell are you doing? We need this oil, these goods through the Strait of Hormuz. I know the US attacked you, but sort it out.' So, the higher the oil price, the more eager everyone is to negotiate. Then the price drops, and suddenly nobody wants a deal. We've been swinging back and forth like this for about three months – roughly as long as the war has lasted.

As this drags on, we are essentially burning through commercial and strategic reserves of oil and other hydrocarbons. Pick any energy analyst; their charts differ but the conclusion is the same: pre-war inventories were ample, leading to a belief in oversupply and relatively low prices. But we are consuming those surpluses at an accelerating rate. We'll hit a certain level at some point – I don't know how many billions of barrels, each analyst has their own number and estimated date. Once we cross that threshold, things will get very, very bad very quickly. The only way to balance the market is to rapidly increase the oil price.

This is the worst-case scenario – no deal between Trump and the IRGC. By October this year, the Strait of Hormuz is effectively blockaded, with only 25% to 30% of normal traffic getting through, far from enough. A more likely scenario is that a deal is reached in a month or two, shipping resumes somewhat. But then everyone needs to rebuild inventories. You must replenish strategic reserves, and you'll hoard more than before – because you just experienced being completely at the mercy of Trump and a group 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 will create additional demand, likely not pushing prices to the catastrophic highs, but it still means oil, gas, and other commodity prices will be higher three or four months from now than today.

The Connection Between Oil, War, and Elections

Arthur Hayes:

Following this logic, look at Trump and his GOP buddies' midterm elections (November 2026). The House is highly likely to be lost. If you check Polymarket's odds right now, the probability of Democrats retaking the House is already up to 82%.

Why is that? Obviously, Trump is getting hammered on the cost of living. People feel inflation is bad and getting worse. In the public's eyes, the GOP is in the White House, they provoked this damned conflict and war, so naturally, the GOP gets the blame. That's why everyone thinks they will lose, and lose badly.

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

Trump Shifting to Anti-AI

Arthur Hayes:

If you, as the opposition party, can exploit this fear, you have two powerful messages: one is the crippling inflation caused by the GOP's war, and the other is the AI building boom effectively endorsed by GOP politicians. So my theory is, if Trump wants to pull a rabbit out of his hat, the only issue he can flip on is AI. Take the Democratic microphone and say, 'We need to scrutinize data centers more, we need an AI national dividend, tax them.' That's Trumpian rhetoric. He can say a lot of things; whether he acts on it after November is another story. I think this is their only viable path to win – positioning themselves as the party protecting Americans from AI, and then Americans will forget that the GOP financed it all because people have short memories. So I see this as the primary risk.

Furthermore, Trump's willingness to attack AI depends purely on the oil price, which is a result of the reflexive relationship between him and the IRGC. The longer the war drags on without a solution, the more we accumulate commodity pressure that will lead to price spikes later, and the more likely Trump is to go after AI to try to win the election, at least to help the GOP keep the House. Obviously, the most destructive thing for the AI narrative is taxation and regulation. We saw it in Korea; when a politician suggested a national AI tax, Cosby immediately hit its daily limit down. So I think if this kind of rhetoric starts being openly promoted by the ruling party, especially Trump, you'll see the AI bubble peak, at least until the election period, 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 cleared my entire portfolio in the latter part of last week.

New Investment Portfolio Allocation

Host Kyle Chasse: Where is most of your liquid assets 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; it doesn't matter if you like it or not. People need oil; it drives 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 better, they weren't that good, so we sell the stocks. That's the logic.

The Math of the AI Capital Expenditure Bubble

Arthur Hayes:

I trade by feel and intuition, not much analysis. I feel we're in some phase of the AI bubble; I'm just not sure which one. I listened to Marco Papovich's podcast over the weekend; he's a strategist at BCA, and he has a great YouTube channel called Geopolitical Cousins, which I strongly recommend subscribing to. He shares many views on his podcast and in his articles. He made a crucial point: When you invest in AI, you're not investing in earnings; you're investing in the capex buildout of data centers. This