Bitcoin may be setting up for a stronger move before year-end, and Arthur Hayes is tying that outlook directly to three major factors.
Speaking at Bitcoin Vegas 2026 on Monday, Hayes, who is now the CIO of Maelstrom, said he expects Bitcoin to reach $125,000 before the end of the year. His view connects three key points, including rising U.S. defense spending, changes in banking regulation, and a reversal from earlier credit tightening spurred by artificial intelligence.
Key Points
- Arthur Hayes said he expects Bitcoin to reach $125,000 before the end of the year.
- A major part of Hayes’ bullish outlook centers on the new lending capacity of the U.S. financial system.
- Hayes pointed to projected U.S. defense outlays nearing $1.5 trillion as a major source of new capital entering the system, driving Bitcoin higher.
- He also pushed back on concerns that tighter monetary policy under incoming Federal Reserve leadership would limit liquidity.
Liquidity Could Expand by Trillions, Impacting Bitcoin
A major part of Hayes’ bullish outlook centers on the new lending capacity of the U.S. financial system. He pointed to the Enhanced Supplemental Leverage Ratio, which took effect on April 1, as a key change that allows large banks such as JPMorgan Chase and Citibank to hold fewer reserves against their assets.
According to estimates from S&P Global, this adjustment alone could unlock around $1.3 trillion in new loans.
Hayes went further, arguing that when typical banking multipliers are applied, the total credit expansion could approach $4 trillion. In his view, that level of liquidity would outweigh the earlier contraction caused by AI-driven job displacement, which he described as a hidden credit deflation event.
According to the BitMEX co-founder, AI is the new “subprime” that has been replacing workers and cutting tech companies’ revenue. He cited the performance trends following Bitcoin’s October 2025 peak.
While tech-heavy indices like the Nasdaq Composite remained relatively stable, Bitcoin (BTC) dropped by 50%. Hayes believes that divergence reflected pressure on software and SaaS companies as AI tools reduced demand for traditional services. However, he expects the $4 trillion in credit liquidity to cover this, positively impacting Bitcoin’s price.
War Spending and Policy Realities Reshape BTC Outlook
Furthermore, Hayes claimed that markets are now shifting focus from AI-related deflation to wartime inflation. Interestingly, Bitcoin has outperformed the Nasdaq, SaaS, and so-called safe-haven assets like gold and silver since the war started in February.
Following the escalation of the U.S.–Iran conflict, governments are increasing defense spending. He pointed to projected U.S. defense outlays nearing $1.5 trillion, significantly higher than previous budgets, as a major source of new capital entering the system. As such, he expects the U.S. to print more money and buy more bombs, a condition in which Bitcoin thrives.
Lastly, Hayes pushed back against concerns that tighter monetary policy under the incoming Federal Reserve leadership would limit liquidity. Referring to incoming Fed chair Kevin Warsh and Treasury Secretary Scott Bessent, he argued that both institutions must ensure stable demand for U.S. debt, which now exceeds $38 trillion.
In practice, this could involve structural adjustments in which banks exchange reserves for Treasurys and repos, thereby maintaining liquidity even if the Federal Reserve’s balance sheet appears smaller. Hayes stressed that, from a market perspective, the net effect remains unchanged: capital continues to circulate.
He also noted that foreign demand for U.S. Treasurys has plateaued, meaning domestic institutions will need to absorb more issuance. Combined with regulatory changes and increased government borrowing, this creates conditions where credit must expand to keep the system functioning.
Bringing these factors together, Hayes sees a clear shift underway for Bitcoin. In his view, the combination of expanding credit, rising fiscal spending, and structural policy support sets the stage for a move toward $125,000, even if volatility remains part of the path. From the current market price of $76,600, this would require a 63% increase.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
