Bitcoin's price could fall lower, says Arthur Hayes, but argued that renewed money printing could eventually push it to a new all-time high. | Source: CCN
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Key Takeaways
Arthur Hayes warns Bitcoin could fall below $60,000 if an AI-driven credit shock triggers broader market stress.
He argues Bitcoin’s divergence from the Nasdaq signals looming credit destruction tied to AI-related job losses.
Despite short-term downside risk, Hayes believes a Federal Reserve liquidity response could ultimately push Bitcoin to new highs.
Former BitMEX CEO Arthur Hayes said Bitcoin could fall below $60,000 if an AI-driven credit shock triggers a broader liquidity scramble.
The crypto mogul argues the market’s recent divergence from U.S. tech stocks may be an early warning of deflationary stress building in the financial system.
In an essay published Tuesday titled “This Is Fine,” Hayes described Bitcoin as “the global fiat liquidity fire alarm,” saying the widening gap between Bitcoin and the Nasdaq 100 “sounds the alarm that a massive credit destruction event is nigh.”
Hayes said markets may not have fully priced the fallout, leaving Bitcoin vulnerable to another leg down before a policy response — though he sees new highs after.
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Hayes warned that Bitcoin’s recent decline may not be finished, outlining what he called “two scenarios” for its trajectory depending on whether stocks and credit markets follow it lower.
Either the drop from $126,000 to $60,000 marked the bulk of the decline, he wrote, or Bitcoin could fall further as equities and other credit-sensitive sectors reprice.
In a broader liquidity scramble, Hayes warned, investors could dump risk assets indiscriminately, with Bitcoin potentially trading sideways or falling below $60,000 “until the Fed gins up the money printer.”
Is Bitcoin’s Price A Warning Sign?
Hayes said the case for further downside rests on Bitcoin’s decoupling from the Nasdaq 100 — a relationship many investors have historically treated as a proxy for risk appetite.
“Many investors perceive Bitcoin… as a leveraged play on the Nasdaq,” he wrote, adding that when the two diverge, “it warrants further investigation” into tightening credit conditions.
Arthur Hayes Gold to Bitcoin ratio | Source: Arthur Hayes
He pointed to market signals showing Bitcoin weakening even as the Nasdaq held steady, and cited gold’s relative strength against it as evidence that investors are increasingly pricing deflationary risk.
“A surging gold versus a slumping Bitcoin clearly tells us that a deflationary risk-off credit event within Pax Americana is brewing,” he wrote. (chart)
AI Crisis
In the essay, Hayes argued that the potential credit shock could stem from widespread displacement of white-collar workers by AI.
“This time around,” he wrote, “the market will discount the impact on consumer credit and mortgage debt because of the inability of white-collar knowledge worker debt donkeys to meet their monthly payments.”
He attributed that risk directly to automation, writing that borrowers may struggle to service debts “because AI took der jobs!”
Hayes acknowledged the severity of the claim but stressed that knowledge work is especially vulnerable. He explained AI systems can quickly replicate digital tasks.
“Knowledge workers manipulate bits, which can move at the speed of light,” he wrote, adding that “the pace of white vs. blue-collar job losses will be much faster.”
Hayes compared the dynamic to the long-term economic impact of China’s entry into the World Trade Organization in 2001.
He said the event contributed to manufacturing job losses and ultimately helped destabilize the U.S. financial system ahead of the 2008 crisis.
Why Hayes Says It’s Bullish for Bitcoin Price
Hayes argued that while an AI-driven credit shock would likely be deflationary at first, it would ultimately set the stage for a policy response that he believes is supportive for Bitcoin — eventually leading to an all-time high.
“Deflation is bad, but ultimately good for fiat credit-sensitive assets like Bitcoin,” he wrote.
Hayes said the turning point would come when central banks intervene.
Once policymakers respond, he wrote, “the surge in fiat credit creation pumps Bitcoin decisively off its lows.”
He added that the expectations of further liquidity to stabilize the banking system could propel Bitcoin to a new all-time high.
Estimated Bank Losses
To illustrate the potential scale of the shock, Hayes laid out a rough framework for estimating losses to the U.S. banking system.
Using Bureau of Labor Statistics data, he cited roughly 72 million knowledge workers in the U.S. and focused on the debt burdens carried by higher-income households.
He estimated total U.S. consumer credit at $5.1 trillion and said that after excluding student loans, bank exposure falls to roughly $3.76 trillion.
He also pointed to mortgage exposure among knowledge workers, citing an average mortgage balance of about $250,000.
Assuming 20% of knowledge workers were displaced by AI, Hayes estimated markets could price in roughly $330 billion of losses in consumer credit portfolios and about $227 billion in mortgage losses.
After comparing those figures with industry loan-loss reserves published by the FDIC, he wrote that the shock would translate into an estimated 13% write-down against the equity capital of U.S. commercial banks.
Kurt Robson is a London-based reporter at CCN, specialising in the fast-moving worlds of crypto and emerging technology. He began his career covering local news in Cornwall after graduating from Falmouth University with First Class Honours in Journalism. There, he cut his teeth on everything from council meetings to missing swans.
He quickly rose through the ranks to become a frontline journalist at several of the UK’s leading national newspapers. Over the years, he has interviewed musicians and celebrities, reported from courtrooms and crime scenes, and secured multiple front-page exclusives.
Following the upheaval of the COVID-19 pandemic, Kurt shifted his focus to technology journalism—just ahead of the AI boom. With a natural curiosity and a trained eye for emerging trends, he has found a new rhythm in reporting on innovation.
At CCN, Kurt's work focuses on the cutting edge of crypto, blockchain, AI, and the evolving digital world. Drawing on his background in people-first reporting and his deep interest in disruptive tech, Kurt delivers stories that are insightful, entertaining, and human-centric.
