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Key Takeaways
- Bitcoin’s next major bull run depends on an AI market crash, says Arthur Hayes.
- BTC could fall before moving significantly higher.
- The next financial crisis could originate from the AI sector.
Bitcoin will not begin its next major rally until the AI investment boom collapses, according to BitMEX co-founder Arthur Hayes.
The famed analyst argues that a bursting AI bubble could trigger a broader financial crisis before unleashing a new wave of liquidity that benefits crypto.
In his recent essay, Hayes warned that rising energy costs and a flood of highly valued technology IPOs could spark a sharp correction across financial markets.
“When the dust settles, then and only then, can Bitcoin rise from the ashes,” Hayes wrote.
AI Bubble Must Burst Before Bitcoin’s Next Rally
Hayes argued that AI companies have absorbed most of the liquidity created in recent years, leaving little capital available for Bitcoin and the broader crypto market.
According to Hayes, investors have poured enormous amounts of borrowed capital into building data centers and AI infrastructure since the launch of ChatGPT in late 2022.
He estimates that roughly $1.5 trillion of debt was issued to finance AI-related expansion during that period.
“AI sucked up all the created dollars. Bitcoin never had a chance,” he said.
Hayes argues that this helps explain why AI-linked stocks have significantly outperformed crypto despite expanding global liquidity conditions.
In his view, Bitcoin’s next major advance cannot begin until capital stops flowing into AI and the market reassesses growth expectations for the sector.
“The connection between Bitcoin and AI stonk prices means we must have a view on whether AI stock prices are in a bubble and when it is likely to pop,” he wrote.
Bitcoin Could Crash Before Exploding Higher
While Hayes remains optimistic about Bitcoin over the long term, he believes the crypto could suffer significant losses if AI-related assets enter a bear market.
“This matters because if AI stocks crater, there will be no excess capital with which to invest in Bitcoin,” Hayes wrote.
He warned that falling AI stock prices could trigger tighter credit conditions, particularly if banks become concerned about loans extended to finance AI infrastructure projects.
“Bitcoin cannot rally in the short term if the entire world takes serious losses from the deflation of the AI bubble globally,” he said.
However, despite the near-term risks, Hayes ultimately expects Bitcoin to benefit in the long term.
“Eventually, it will bottom, then rise as Bitcoin forecasts an increase in liquidity to put Humpty Dumpty back together again,” he wrote.
“I am confident that Bitcoin will dump then pump,” he added.
Timeline: When Hayes Thinks Bitcoin’s Rally Will Happen
Hayes envisions a multi-stage sequence beginning with stress in AI markets and ending with a renewed Bitcoin bull run.
First, he expects several factors to pressure AI valuations, including higher energy costs and a wave of massive technology listings.
“There are three darts that will pierce the AI bubble. They are: higher energy costs, the inability of the market to absorb the three mega IPOs (SpaceX, Anthropic, and OpenAI), and Trump’s anti-AI rhetoric,” he wrote.
If those pressures materialize, Hayes expects AI stocks to fall sharply, thereby reducing access to credit.
“Given the explosion of stock margin loans and lending to AI CAPEX, the banking system will take massive losses on the credit extended to the industry,” he said.
After the downturn forces policymakers to respond with a monetary push, Hayes sees conditions aligning for Bitcoin’s next major rally.
“Because ultimately, I believe that once the AI bubble pops, it will cause a financial crisis that will usher forth the Big Print,” Hayes wrote.
The Next Financial Crisis Could Come From AI
Hayes also argued that AI has become the latest major credit-fueled investment boom and could trigger the next systemic shock if growth expectations fail.
“The commercial release of ChatGPT on November 30, 2022, started the great AI bubble,” he wrote.
He believes investors are underestimating the risks associated with surging capital expenditures and the large amount of debt supporting the industry.
“Every AI name that has pumped over the last few years can only continue going higher if investors believe earnings growth will accelerate into the future,” Hayes wrote.
The problem, he argues, is that rising energy costs and slowing growth could challenge those assumptions.
“If token usage drops alongside earnings, it calls into question the continuation of planned data center CAPEX spending,” he wrote. “When the market questions that, it’s game over,” he said.
Hayes also warned that upcoming IPOs from companies such as SpaceX, Anthropic, and OpenAI could test investor demand for AI assets, given already stretched valuations.
“If the three darts hit true to mark, none of these IPOs will do as well as expected,” he wrote.
Hayes’ Outlook Has Shifted Significantly
The famed analyst’s latest warning about an AI-driven market correction marks a notable shift from his outlook just a month earlier.
In a May 11 essay titled The Butterfly Touch, he argued that Bitcoin’s correction had already ended, describing the move to roughly $60,000 as the cycle bottom and predicting a return to all-time highs.
“Bitcoin bottomed earlier this year at $60,000, and with a tailwind of trillions of dollars and yuan yet to be created at its back, retaking the $126,000 is a foregone conclusion,” Hayes wrote at the time.
He also suggested that a break above $90,000 could accelerate bullish momentum, as traders would be forced to reposition.
However, in his latest essay, Hayes acknowledged that some of his previous forecasts have missed the mark.
“Yes, I know I proclaimed we wouldn’t see $60,000 Bitcoin again, and obviously I erred, but that’s forecasting for you,” he wrote.
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.
