Arthur Hayes is holding ETH despite calling it “dead,” betting a financial crisis would force central banks to print money, sending Bitcoin lower first, then sharply higher.
- Arthur Hayes sold his Hyperliquid, Near Protocol, and Worldcoin holdings and exited Zcash, calling the moves defensive.
- He argued the artificial intelligence buildout drained liquidity from crypto, citing roughly $1.5 trillion in AI debt against a near-equal rise in the money supply.
- He named three risks that could burst the AI bubble, including an oil disruption at the Strait of Hormuz and President Trump turning against AI before the midterms, among others.
Arthur Hayes, Chief Investment Officer of Maelstrom, sold off a basket of altcoins last week and reallocated his fund’s holdings. He argued that the burst of the AI stock bubble has dragged the entire cryptocurrency market into a downturn, with only Bitcoin (BTC) managing to recover.
Crypto industry practitioner Hayes published an article titled Reality Test on Monday. He liquidated all his holdings of Hyperliquid (HYPE), Near Protocol (NEAR), and Worldcoin (WLD), and exited his position in Zcash (ZEC) due to a vulnerability in Orchard Pool. Hayes stated that all these operations are defensive in nature and that at present, capital preservation takes priority over capital appreciation.
Hayes said AI starved Bitcoin of the liquidity that would normally buoy it. He estimated that $1.5 trillion in debt was issued to fund AI buildout from November 2022 to now, against a near-identical $1.5 trillion rise in M2 money supply over the same window, meaning AI “sucked up all created dollars.”
The crux of his bearish call hinged on what he called three “darts” that could burst the AI bubble: higher energy costs from a disruption of oil traffic through the Strait of Hormuz amid the US-Iran conflict, the market’s inability to absorb a wave of mega IPOs from SpaceX, Anthropic and OpenAI, and Trump possibly taking an anti-AI stance to win votes ahead of the November midterms. “If AI stocks crater, there will be no excess capital with which to invest in Bitcoin. Banks will pull back on lending, and some will find that their loans were based on fugazi cash flows,” Hayes argued.
He wrote, “The credit destruction is real, and it will tighten liquidity. And if the politics is negative towards AI, there will be no immediate rescue. Eventually, the government will bail out the banksters, but in my model, Trump must talk tough towards the AI tech bros and their financial enablers to hoodwink the public into believing he is serious about creating an equitable distribution of the wealth generated by the AI productivity miracle. A rescue is only politically feasible after the election in November.”
Hayes Is Betting On Ethereum Even As He Calls It ‘Dead’
Hayes was blunt about Ethereum (ETH) on individual tokens, calling Ether “dead but functional.” He said he is holding his ETH position anyway, citing no near-term need to sell and his conviction that an AI-driven financial crisis would eventually force central banks into “The Big Print” , a fresh wave of money creation he expects to send Bitcoin lower first, then sharply higher.
Ethereum’s price was trading at $1,670, flat over the past day. Ethereum was down over 43% year-to-date. On Stocktwits, retail sentiment around ETH remained in the ‘Extremely Bullish’ zone, while chatter stayed at ‘high’ levels over the past day.
Currently, Maelstrom is long US-listed energy producers with core positions in Bitcoin and Ethereum and tactical short positions via derivatives. Hayes said he could look at the market again in early September.
Hayes also admitted he was wrong in his own predictions, saying he had previously said Bitcoin would never trade at $60,000 again. At the time of writing, Bitcoin’s price was trading at $62,677, down 0.8% in the last 24 hours. On Stocktwits, retail sentiment around BTC remained in the ‘bearish’ zone, while the chatter stayed at ‘high’ levels over the past day.
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