Bitcoin To $125,000: Arthur Hayes Says The Setup Is Turning Bullish

TL;DR

Arthur Hayes predicts Bitcoin could reach $125,000 as its macro setup turns bullish, driven by wartime spending and US fiscal deficits. He argues that Bitcoin is responding to wartime inflation rather than just the AI cycle.

Key points

Arthur Hayes predicts Bitcoin could reach $125,000
Bitcoin's macro setup is turning bullish
Wartime spending and US fiscal deficits are key drivers
Bitcoin is responding to wartime inflation
Hayes emphasizes liquidity-sensitive asset narrative

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Arthur HayesBitMEXLas Vegas

Arthur Hayes says Bitcoin’s macro setup is turning bullish again, arguing that wartime spending, US fiscal deficits and bank-led credit creation could outweigh fears of a smaller Federal Reserve balance sheet. Speaking at the Bitcoin 2026 conference in Las Vegas, the BitMEX co-founder said Bitcoin is increasingly trading as a response to “wartime inflation,” not just the artificial intelligence cycle.

Hayes framed the recent shift around a simple premise: governments are openly preparing to spend more on defense, and that spending ultimately has to be financed. In his view, that puts Bitcoin back in familiar territory as a liquidity-sensitive asset with a hard-money narrative.

“Since the war has started, Bitcoin has outperformed,” Hayes said. “It outperformed NASDAQ and outperformed the SaaS stocks. And basically, I think that Bitcoin is now focusing on wartime inflation.”

The core of Hayes’ argument was not that the Fed will suddenly return to explicit quantitative easing. Instead, he focused on what he described as a likely balance-sheet reshuffling between the Fed and the commercial banking system, one that could allow officials to claim the Fed is shrinking while leaving the broader dollar liquidity picture largely intact.

Bitcoin Vs. The Hawkish Fed Narrative

Hayes addressed market concerns around Kevin Warsh, whom he said investors have viewed as a potentially hawkish Fed chair because of his criticism of the central bank’s large balance sheet. Hayes said those fears miss the practical constraints facing monetary officials when the US government is still issuing massive amounts of debt.

“If the market believes that there’s going to be less dollar liquidity floating around the system because of what Warsh will do with the Fed, then they’ll be bearish on Bitcoin and other risk assets,” Hayes said. “This is what we’ve seen in the media talking about sort of this hawkish Fed that’s going to come into place after May when Warsh takes over. Now, I don’t believe that’s the case.”

According to Hayes, Warsh would be constrained by the Treasury’s need to keep the bond market functioning. He argued that the Fed cannot pursue balance-sheet reduction in a vacuum when the US government must continue funding large deficits.

“At the end of the day, when you’ve issued $38 trillion of debt and you need to fund the government, the Federal Reserve will do what it’s asked to do, which is make sure the market is orderly so that people can buy this debt,” Hayes said.