Arthur Hayes: War spending injects massive funds into the market, and Bitcoin will reach $125k by year-end

Maelstrom Chief Investment Officer Arthur Hayes said during an in-person keynote at the 2026 Bitcoin Las Vegas conference on April 27 that he has shifted to a bullish stance on Bitcoin and expects Bitcoin to reach $125k by year-end. He attributed this to AI-driven implicit credit contraction, the Federal Reserve’s policy handoff to incoming chair Kevin Warsh, and a structural shift in the way U.S. commercial banks absorb government debt.

AI Credit Contraction: Key Points

According to Hayes’ statements in his speech, he describes the impact of AI on the revenues of technology SaaS companies as “an implicit credit contraction event ignored by the central bank,” and characterizes it as “a new subprime crisis.” Knowledge workers whose high salaries are maintained by commercial bank loans represent large exposures to credit risk that have not yet been accounted for on banks’ balance sheets.

Hayes directly quoted: “These stocks have been severely hit. I think this is showing that there’s a credit contraction event that the central bank hasn’t noticed. So the central bank isn’t printing enough money, and Bitcoin is getting hit as well.” He added: “I can’t wait to have Claude take over. This will have a profoundly negative effect on institutions that extend loans to people with extremely high incomes.”

ESLR Takes Effect: S&P Global Estimates $1.3 Trillion in New Lending, $4 Trillion in Credit Creation

Based on S&P Global figures Hayes cited in his speech, with the relaxation of the “Enhanced Supplemental Leverage Ratio” (ESLR) rules taking effect on April 1, the change is expected to catalyze $1.3 trillion in additional lending. It will allow large banks such as JPMorgan Chase and Citibank to reduce the amount of reserves they hold against assets. Smaller banks, meanwhile, will get more room to expand construction and industrial loans.

Hayes calculated the effect using roughly a 3x bank multiplier and directly quoted: “So that’s about $4 trillion in credit creation, which is more than the credit destruction caused by AI unemployment. That’s why I’m even more bullish on Bitcoin.”

Wartime Spending and Federal Reserve Policy Analysis

According to Hayes’ remarks, after the outbreak of the war between Iran and the U.S. in late February, Bitcoin’s performance had already surpassed the Nasdaq and SaaS stocks. The U.S. defense budget is expected to approach $1.5 trillion (about 50% higher than previously allocated funding), providing new momentum on the credit demand side. Hayes cited: “Bitcoin is now focused on wartime inflation.”

On the matter of who will be Federal Reserve chair, Hayes said Warsh will collaborate with Treasury Secretary Scott Bessent and there will be no tightening-style balance sheet operations. Hayes cited: “At the end of the day, we issued $38 trillion in debt, and the government needs funding. The Federal Reserve will do its job to ensure market order, so people can buy those debts.”

Bitcoin Year-End Target and Liquidity Index

Based on Hayes’ direct remarks in his closing remarks, his personal liquidity index is synchronized with Bitcoin hitting a bottom in November, after which it has already started to rebound. Hayes said: “Now is the time to break out. I think my year-end target price is around $125k.”

FAQ

What is the basis for Arthur Hayes’ prediction of Bitcoin’s year-end target?

According to Arthur Hayes’ speech at the 2026 Bitcoin Las Vegas conference, he predicts that Bitcoin will reach $125k by year-end. The main basis is the $1.3 trillion in additional lending released by the ESLR (S&P Global estimates), the $4 trillion in credit creation brought by a 3x bank multiplier effect, and approximately $1.5 trillion in wartime defense spending.

What is the estimated specific impact of ESLR taking effect on bank lending?

Based on the S&P Global estimates Hayes cited in his speech, with ESLR taking effect on April 1, it is expected to generate $1.3 trillion in additional lending. Hayes calculated using roughly a 3x bank multiplier effect and inferred that total credit creation would reach roughly $4 trillion.

How does Hayes analyze the impact on market liquidity of Kevin Warsh becoming Federal Reserve chair?

Based on Hayes’ statements in the speech, he believes Warsh will collaborate with Treasury Secretary Scott Bessent to maintain order in the bond market. The roughly $3 trillion in Federal Reserve reserves held by banks would help shrink the balance sheet through reserve-for-Treasury operations, but the net effect on dollar liquidity will be zero.