At Bitcoin Vegas 2026, Arthur Hayes, co-founder and former CEO of BitMEX, laid out a bullish case for Bitcoin that could see the price climb to roughly $125,000 by the end of 2026. His outlook centers on several macro drivers he says will inject fresh liquidity into markets and create a favorable backdrop for crypto appreciation.
Liquidity boost from regulatory change
A core element of Hayes’ argument is a recent regulatory shift—what he described as the Enhanced Supplemental Leverage Ratio, effective April 1—that reduces capital requirements for major banks. Hayes says that by lowering the amount of capital banks must hold against assets, the rule frees up balance-sheet capacity, enabling expanded lending. Applying conventional banking multipliers to that new capacity, he estimates the effective credit expansion could be on the order of $4 trillion, which would substantially add liquidity to financial markets.
AI disruption as hidden deflation
Hayes also framed recent market weakness through the lens of AI-driven disruption. He compared AI’s effect on employment and corporate revenues to a form of “credit deflation,” likening it to a new subprime-like shock that has pressured tech and software firms. He pointed to market behavior after Bitcoin’s October 2025 peak: while tech-heavy indexes such as the Nasdaq held up, Bitcoin plunged roughly 50%. Hayes interprets that divergence as evidence of stress in revenue-dependent tech sectors even as other asset classes remained stable. His view is that the projected wave of credit liquidity would more than offset that AI-related drag and help power a renewed Bitcoin rally.
Defense spending and fiscal impulse
Geopolitical tensions and rising defense budgets are another pillar of Hayes’ thesis. He cited an escalation in the U.S.–Iran conflict and growing prioritization of military readiness as reasons governments are increasing defense outlays—U.S. figures Hayes referenced approach $1.5 trillion. He argued that such fiscal expansion effectively spills liquidity into the economy and financial markets, supporting risk assets, including Bitcoin.
Monetary and fiscal policy expectations
Hayes dismissed concerns that new leadership at the Federal Reserve would choke off liquidity. He named incoming Fed Chair Kevin Warsh and Treasury Secretary Scott Bessent and suggested both institutions will have incentives to keep demand for U.S. debt high as the national debt surpasses $38 trillion. In his view, that dynamic will keep monetary and fiscal conditions accommodative enough to support asset prices.
Market context
At the time of his remarks, Bitcoin was trading near $76,051 after failing to clear the $80,000 level the previous week. Hayes acknowledged recent volatility but remains constructive, saying the mix of regulatory-driven credit expansion, fiscal stimulus from defense spending, and persistent demand for risk assets sets the stage for a breakout toward his $125,000 target by the end of 2026.