BitMEX co-founder Arthur Hayes told a Vegas crowd at Bitcoin 2026 that Bitcoin’s macro outlook is turning bullish again — and not for the reasons many in crypto expect. Speaking in Las Vegas, Hayes argued that wartime spending, large US fiscal deficits and a renewed surge in bank-led credit creation could swamp concerns about a shrinking Federal Reserve balance sheet, pushing Bitcoin higher as a liquidity-sensitive, “hard-money” asset.
Wartime inflation, not just AI, driving Bitcoin
Hayes framed the market’s recent behavior around a simple premise: governments are openly preparing to spend more on defense, and that spending needs to be financed. “Since the war has started, Bitcoin has outperformed,” he said. “It outperformed NASDAQ and outperformed the SaaS stocks. And basically, I think that Bitcoin is now focusing on wartime inflation.” In his view, Bitcoin is increasingly trading as a hedge against “wartime inflation” rather than purely riding tech cycles like AI.
Not QE — a balance-sheet reshuffle
Hayes was careful to say he’s not forecasting a return to explicit quantitative easing. Instead, he outlined a likely balance-sheet reshuffling between the Fed and the commercial banking system that could let policymakers claim a smaller Fed balance sheet on paper while leaving overall dollar liquidity largely intact.
His core mechanism: a swap in which commercial banks trade down their Fed reserve holdings in exchange for Treasuries and repo positions. That would shrink the Fed’s balance sheet cosmetically while moving government debt onto bank balance sheets — “purely regulatory fiction in terms of who is allowed to hold what,” Hayes said. The net effect, he argued, would be neutral for dollar liquidity if the banking system simply replaces Fed-held assets with government paper.
Why a potentially “hawkish” Fed chair may be constrained
Hayes also pushed back on fears that a more hawkish Fed chair—he named Kevin Warsh as the market’s likely candidate—would drain liquidity and hurt risk assets, including Bitcoin. Hayes said Warsh would be constrained by the Treasury’s need to keep the bond market functioning while the US continues issuing massive amounts of debt. “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.
Deregulation, ESLR changes and a wave of bank lending
A key plank of Hayes’ bullish case is regulatory change. He cited an April 1 change to the Enhanced Supplementary Leverage Ratio (ESLR) that, in his telling, allows large banks like JPMorgan and Citibank to absorb more Treasuries and repo, while freeing smaller banks to expand construction and industrial lending. Hayes pointed to an S&P Global estimate that the ESLR shift could unlock about $1.3 trillion in new loans.
Hayes went further, estimating that bank lending could create as much as $4 trillion in credit through higher lending multipliers compared with central bank liquidity. He said the demand for that lending is already visible: defense contractors, resource producers and AI hyperscalers are becoming national-security priorities and therefore attractive borrowers with government-backed demand. “Why will banks have demand for loans? … We have a great source of demand that is the US Department of War,” he said.
What this means for Bitcoin
For Hayes, these dynamics — wartime spending plus a bank-led absorption of Treasuries — change the liquidity picture in a way that favors Bitcoin. He argued that liquidity bottomed in November of last year, roughly in line with Bitcoin’s trough, and that after a period of “a bit of a chop” and wartime uncertainty, the market is ready to resume an uptrend. He floated an end-of-year target around $125,000, adding with a laugh, “it doesn’t fucking matter, I’m wrong anyways.”
At press time, Bitcoin was trading around $76,628.
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