Bitcoin to $125K? Arthur Hayes Says Wartime Money Printing Is the Catalyst

by

<a href="https://pricpr.com/btc-usd/">Bitcoin</a> to $125K? Arthur Hayes Says Wartime Money Printing Is the Catalyst

On Tuesday, Bitcoin’s price dropped below $77,000 after it failed to sustain a recent price increase. This decline was likely influenced by rising oil prices and anticipation of upcoming announcements from central banks, which made investors less willing to take risks.

Arthur Hayes, CIO of Maelstrom, thinks the recent shift in government spending—away from the large-scale spending seen during the pandemic—is now creating a more positive environment for Bitcoin.

War, Debt, and AI Disruption

At the Bitcoin Vegas 2026 conference, Hayes predicted Bitcoin could climb to $125,000 by year’s end, citing improving global financial conditions and increased spending due to conflicts.

Hayes has revised his outlook due to three key developments: the potential for falling prices linked to advancements in artificial intelligence, new leadership at the Federal Reserve, and a shift in how banks are expected to handle increasing government debt. He believes changes in the money supply are central to this, and anticipates that rising government spending, especially on defense, will likely necessitate more money being injected into the financial system.

Regarding the situation between the US and Iran, Hayes noted some disruption but believes the market hasn’t worsened enough to cause widespread fear. This allows investors to remain focused on overall financial trends rather than reacting to the geopolitical issues. He also pointed to a tightening of credit related to the rise of artificial intelligence, explaining that automation is reducing revenue for software companies and potentially impacting high-paying jobs – a key factor for many bank loans.

Since Bitcoin peaked in October, markets have been moving in different directions, according to Hayes. While Bitcoin’s value fell by 40%, the Nasdaq remained relatively stable. He believes this indicates that companies providing software as a service (SaaS) are facing pressure because artificial intelligence is replacing costly human workers. This situation created a subtle decrease in credit availability that central banks didn’t fully see, leading to a lack of sufficient money supply and contributing to Bitcoin’s price drop.

Hayes warned that AI could pose a significant risk to credit markets, especially since many workers with loans were previously considered reliable earners. He also noted that the overall economic situation shifted after tensions between the US and Iran increased in late February.

Hayes believes that when governments admit they’re preparing for war, it usually means they’ll spend more on defense, which will likely require more borrowing and eventually, printing more money. He argues that concerns about the next Federal Reserve chair, Kevin Warsh, tightening financial policy are probably unfounded. Hayes thinks the Fed will still have to prioritize keeping bond markets stable, working closely with Treasury Secretary Scott Bessent, which will limit its ability to raise interest rates.

He explained a way banks can shift funds from their reserves at the Federal Reserve into Treasury bonds and short-term loans, which lowers the Fed’s reported assets without actually decreasing the amount of money available in the financial system.

According to Hayes, this system ensures the overall impact on bank funding stays the same, no matter how the policy is communicated. He also highlighted the new Enhanced Supplemental Leverage Ratio, which went into effect on April 1st, as a key factor. This rule allows large banks like JPMorgan Chase and Citibank to hold fewer reserves, increasing their ability to buy government bonds and provide loans.

Outpacing AI-Driven Credit Losses

Based on my analysis of S&P Global’s estimates, the proposed regulatory change has the potential to unlock $1.3 trillion in new lending. When you factor in the credit multiplier effect within the banking system, that figure could realistically expand to around $4 trillion in additional credit availability. Importantly, this increase significantly outweighs potential economic downsides related to job losses from the growing use of artificial intelligence.

As I’ve been analyzing the market, it’s become clear that demand for US Treasurys from overseas isn’t growing anymore, even though the national debt keeps increasing. This means we’re relying more and more on domestic banks to buy up the new bonds being issued, a trend that’s being amplified by the significant rise in defense spending.

The market has been volatile recently, with significant ups and downs. After a period of decline, I expect Bitcoin to start rising again. I’m predicting it could reach $125,000 by the end of the year.

Read More

2026-04-28 11:38