- Arthur Hayes sold his holdings in several altcoins, calling the move a defensive strategy to preserve capital.
- He argued that AI development has consumed massive liquidity, leaving little for crypto, and cited three risks that could burst the AI bubble.
- Despite labeling Ethereum “dead,” Hayes is maintaining his position, betting a future financial crisis will force central banks to print money.
Arthur Hayes, Chief Investment Officer of Maelstrom, executed a significant portfolio shift last week, selling his altcoin holdings in a defensive maneuver he detailed in an article titled Reality Test. Consequently, he liquidated his positions in Hyperliquid, Near Protocol, and Worldcoin, and exited ZCash due to a vulnerability.
Hayes argued that the Artificial Intelligence sector has drained crucial market liquidity. He estimated that roughly $1.5 trillion in new debt was issued to fund AI, directly competing with a similar rise in the M2 money supply.
The crux of his bearish outlook hinges on three specific risks he believes could pop the AI bubble. These include an oil supply disruption at the Strait of Hormuz, a market overwhelmed by mega IPOs from companies like SpaceX and OpenAI, and potential anti-AI rhetoric from presidential candidate Donald Trump ahead of the November midterms.
He wrote, “If AI stocks crater, there will be no excess capital with which to invest in Bitcoin.” Hayes believes a resulting credit crunch would tighten liquidity significantly before any government rescue becomes politically feasible.
Meanwhile, Hayes offered a stark assessment of Ethereum, calling Ether “dead but functional.” However, he confirmed he is holding his ETH position. His conviction stems from a belief that an AI-driven financial crisis would eventually force central banks into what he calls “The Big Print,” a fresh wave of money creation.
He expects this monetary response to send Bitcoin lower initially before propelling it sharply higher. Consequently, Maelstrom is currently long US energy producers, maintains core Bitcoin and Ethereum positions, and holds tactical short derivatives.
Hayes also admitted to a previous miscalculation, having once said Bitcoin would never trade at $60,000 again. At the time of writing, Bitcoin’s price was trading near $62,677.
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