BitMEX co-founder and Maelstrom CIO Arthur Hayes has issued a bold new price prediction for Bitcoin, forecasting the cryptocurrency could reach $125,000 by the end of 2026. Speaking at the Bitcoin 2026 Conference in Las Vegas, Hayes outlined a bullish thesis centered on wartime fiscal expansion, regulatory changes, and shifting global liquidity conditions.
Hayes' forecast marks a significant departure from the current market environment, where Bitcoin recently slipped under $77,000 amid rising oil prices and caution ahead of central bank decisions. The projection comes after a 40% decline from Bitcoin's October highs, which Hayes attributes to an AI-driven credit deflation that central banks initially failed to address.
According to Hayes, the widespread adoption of artificial intelligence has led to job losses among knowledge workers and a subsequent credit crunch, as many affected workers carry loans backed by previously stable incomes. He characterized this as a "subprime risk to credit markets," noting that automation is eroding revenues for SaaS companies and threatening high-income jobs that make up a significant portion of bank lending.
However, Hayes argued that the macro backdrop shifted dramatically following the escalation of US-Iran tensions in late February 2026. He said investors are now pricing in the risk of "wartime inflation" instead of an "AI-induced recession." Governments acknowledging a wartime footing implies higher defense expenditures that will need to be financed through increased borrowing and, ultimately, monetary expansion.
On monetary policy, Hayes downplayed concerns about a hawkish Federal Reserve under incoming chair Kevin Warsh. He argued the central bank will remain constrained by the need to maintain orderly bond markets in coordination with Treasury Secretary Scott Bessent. Hayes described a balance sheet adjustment where commercial banks exchange reserve balances for Treasurys and repurchase agreements, which he said reduces the Fed's reported balance sheet without draining liquidity from the system.
A key catalyst, according to Hayes, is the implementation of the Enhanced Supplemental Leverage Ratio (eSLR) on April 1. The rule allows major banks like JPMorgan Chase and Citibank to hold fewer reserves against assets, expanding their capacity to purchase government debt and extend loans. Citing S&P Global estimates, Hayes said the regulatory change could generate $1.3 trillion in new lending capacity, which, combined with the banking system's credit multiplier, could translate into roughly $4 trillion in additional credit — more than offsetting losses linked to AI-driven job displacement.
"We've had some chop. We've had a war. Now it's time to break out. That's why I believe Bitcoin is going higher. I think my end-of-year target is around $125,000," Hayes stated.
