BitMEX co-founder, Arthur Hayes, never misses the opportunity to discuss Bitcoin, and this time he focused on the declining value of the leading cryptocurrency.
In his most recent blog post, “Reality Test,” Hayes made the case that the market is neglecting the oil prices. He believes oil prices remain the primary factor influencing political and economic outcomes.
According to him, energy is the cornerstone of all economic activity, even as investors focus on AI stocks, cryptocurrencies, and interest-rate projections. Although the Strait of Hormuz disruptions have limited the world’s energy supply, Hayes contends that oil prices have not increased sufficiently to pressure Iran or the United States into a compromise.
As a result, there is currently a “Goldilocks” situation in which neither side is forced to compromise and can continue to use tough rhetoric.
However, he thinks this equilibrium is untenable. This is because rising oil prices would drive inflation, raise consumer prices, and put political pressure on Iran and Trump. This, in turn, would ultimately increase the likelihood of a settlement.
How is AI indirectly acting as a blocker?
According to Hayes, Trump may turn his attention to AI by denouncing data center growth, if inflation brought on by rising oil prices turns into a political issue.
He believes that the majority of the liquidity generated recently has been absorbed by the AI boom rather than cryptocurrency. Hence, he thinks that because AI is now linked to Bitcoin’s short-term performance. Simply put, a decline in AI valuations would initially hurt cryptocurrency.
That said, Hayes has even lowered exposure to investments in AI and a number of cryptocurrencies. He contends that the AI bubble burst would put pressure on all risky assets and tighten liquidity rather than divert funds to cryptocurrency.
He left positions like Hyperliquid [HYPE], Near Protocol [NEAR], Worldcoin [WLD], and Zcash [ZEC] to conserve capital.
Hayes stays confident about Bitcoin despite weak metrics
Eventually, though, he continues to be positive about Bitcoin, as he said,
I am confident that Bitcoin will dump then pump.
This comes as Bitcoin fell more than 21% in the last month to trade at 63,244.44. AMBCrypto further reiterated that the market is attempting to hold onto a possible Bitcoin bottom of $60k.
Moreover, the Spot Taker CVD for Bitcoin has not recently displayed the aggressive spot buying that usually characterizes the most robust bull market periods. Instead, it indicates a market that continues to draw buyers despite losing steam.
Final Summary
- Despite investors’ attention shifting to AI and cryptocurrency, Hayes contends that oil prices continue to be the most significant determinant.
- He contends that a large portion of the liquidity generated lately has been absorbed by the AI boom, not the larger cryptocurrency market.