Arthur Hayes, the outspoken co-founder and former CEO of BitMEX, delivered a bullish take on the crypto market outlook at Bitcoin Vegas 2026. Hayes sees room for a strong Bitcoin rally to $125,000 by the end of 2026, driven by powerful macroeconomic catalysts that could spark renewed bullish momentum.
The Money Supply Expansion and AI Disruption Factor
A key pillar of Hayes’ thesis centers on growing liquidity in the U.S. financial system. He highlighted the Enhanced Supplemental Leverage Ratio (effective April 1) as a regulatory shift that allows major banks to hold lower capital reserves against assets—potentially unlocking additional lending capacity and boosting overall market liquidity.
Hayes argued that, once standard banking multipliers are applied, the resulting credit expansion could approach $4 trillion. He believes this wave of liquidity would more than offset the earlier contraction driven by AI-related job displacement, which he described as a hidden form of credit deflation.
According to Hayes, artificial intelligence has effectively become the new “subprime” cycle, displacing workers and weighing on tech-sector revenues. He pointed to market behavior after Bitcoin’s October 2025 peak: while tech-heavy indices like the Nasdaq Composite remained relatively stable, Bitcoin fell sharply by about 50%. Hayes says that divergence reflects mounting pressure on software and SaaS firms as AI tools disrupt traditional revenue models. Despite this weakness, he believes a projected $4 trillion wave of credit liquidity could ultimately offset the drag and act as a powerful tailwind for Bitcoin.
War Spending to Drive BTC Boom
Following escalation in the U.S.–Iran conflict, defense spending is rising as governments prioritize military readiness. Hayes pointed to projected U.S. defense outlays approaching $1.5 trillion as a key driver of new liquidity entering the financial system, arguing this surge effectively translates into expanded money creation and asset purchases.
In his view, this environment of increased fiscal expansion and monetary issuance creates conditions where Bitcoin tends to perform strongly.
“We’ve had some chop. We’ve had a war. Now it’s time to break out. That’s why I believe Bitcoin is going higher. I think my end-of-year target is around $125,000.”
Hayes dismissed concerns that tighter monetary policy under incoming Federal Reserve leadership would restrict liquidity. Pointing to incoming Fed Chair Kevin Warsh and Treasury Secretary Scott Bessent, he argued both the Fed and Treasury will ultimately be forced to maintain strong demand for U.S. debt, which has now surpassed $38 trillion.
Bitcoin was recently trading around $76,051 after the psychological barrier of $80,000 was strongly rejected last week.