Arthur Hayes Predicts AI-Triggered Credit Crisis, Followed by Bitcoin’s Unprecedented Surge

Bitcoin’s recent plummet, crashing over 52% from its historical highs last October, has sent ripples of concern through the crypto market. While many attribute this downturn to a standard risk asset correction, BitMEX co-founder Arthur Hayes offers a far more ominous—yet ultimately bullish—prognosis: an impending credit crisis, ignited by artificial intelligence (AI), that will paradoxically catapult Bitcoin to unimaginable new heights post-Federal Reserve (Fed) intervention.

The Alarming Decoupling: A Harbinger of Credit Destruction

In his latest blog post, Hayes highlights a crucial divergence: Bitcoin’s performance has decoupled from that of tech stocks. While the Nasdaq index has largely held its ground, Bitcoin has plunged from $126,000 to $67,000. He posits that this isn’t mere market volatility but a harbinger of a deeper financial disruption.

Among all freely traded assets, Bitcoin is the most sensitive to changes in fiat credit supply. The recent divergence between Bitcoin and the Nasdaq index sounds an alarm, indicating that a massive credit destruction event is likely imminent.

AI’s Structural Impact: The Catalyst for Crisis

Hayes’s projection centers on the transformative, and potentially destructive, power of AI on the white-collar job market. He hypothesizes that if 20% of the approximately 72.1 million knowledge workers in the U.S. (around 14.4 million individuals) are displaced by AI automation, it could trigger a staggering $557 billion in consumer credit and mortgage defaults. This figure, alarmingly, represents roughly half the scale of the 2008 financial crisis.

This AI-induced economic shock, Hayes predicts, will disproportionately impact U.S. regional banks, forcing the Federal Reserve (Fed) to respond with unprecedented liquidity injections and massive money printing. Despite the initial pain of deflation, Hayes sees this as a long-term boon for Bitcoin.

Although deflation is painful, for a “credit-sensitive asset” like Bitcoin, it is a significant positive boost.

Hayes outlines a two-phase trajectory: First, the market will experience the immediate shock, leading to sharp price declines. Second, financial and policy leaders, gripped by panic, will unleash monetary stimulus on a scale far exceeding any previous intervention.

Pax Americana Under Threat: The Gold-Bitcoin Signal

Another critical signal Hayes points to is the divergence between gold and Bitcoin. When gold rises while Bitcoin weakens, it often signals a “deflationary, hedge-oriented credit event” brewing within the U.S.-dominated financial system, which he terms “Pax Americana.”

Hayes forecasts that once the Fed intervenes, much like its response to the regional banking crisis in 2023, Bitcoin will “decisively break from the bottom,” staging a powerful rebound and reaching unprecedented peaks amidst a fresh wave of capital.

Strategic Advice for Crypto Investors: Patience and Liquidity

However, Hayes cautions that Bitcoin may remain under pressure, potentially even dipping below the $60,000 mark, until the Fed’s intervention truly materializes, especially if political gridlock delays rescue efforts.

For savvy cryptocurrency investors, Hayes offers clear advice: “maintain ample liquidity” and “avoid using leverage.” He urges patience, waiting for the Fed to signal an “all clear”—the optimal moment, he suggests, to “dump dirty fiat and go all-in on risk assets.”