BitMEX co-founder Arthur Hayes never misses a chance 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 argued that the market is neglecting oil prices. He believes oil prices remain the most important 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 argues that oil prices have not risen enough to force Iran or the United States to compromise.
As a result, there is currently a ‘Goldilocks’ situation in which neither side is forced to compromise and can continue to use harsh rhetoric.
However, he considers this balance untenable. This is because rising oil prices would drive inflation, increase consumer prices and put political pressure on Iran and Trump. This would ultimately increase the likelihood of a settlement.
How does AI work indirectly as a blocker?
According to HayesTrump could turn his attention to AI by denouncing the growth of data centers if inflation caused by rising oil prices becomes a political issue.
He believes that most of the recently generated liquidity has been absorbed by the AI boom rather than cryptocurrency. That’s why he thinks that because AI is now linked to Bitcoin’s short-term performance. Simply put, a drop in AI valuations would initially hurt the cryptocurrency.
That said, Hayes has even reduced exposure to investments in AI and some cryptocurrencies. He claims that bursting the AI bubble would put pressure on all risky assets and tighten liquidity instead of shifting money into cryptocurrency.
He left positions like Hyperliquid [HYPE]Close to protocol [NEAR]World currency [WLD]and Zcash [ZEC] preserve capital.
Hayes remains confident in Bitcoin despite weak data
Ultimately, though, he remains bullish on Bitcoin, as he said:
I am convinced that Bitcoin will dump and then pump.
This is because Bitcoin fell more than 21% to 63,244.44 last month. AMBCrypto further reiterated that the market is trying to hold a possible Bitcoin bottom at $60,000.
Furthermore, the Spot Taker CVD for Bitcoin has not recently exhibited the aggressive spot buying that typically characterizes the most robust bull market periods. Instead, it signals a market that continues to attract buyers despite losing steam.
Final summary
- Despite investor attention shifting to AI and cryptocurrency, Hayes maintains that oil prices remain the key determining factor.
- He claims that much of the recently generated liquidity has been absorbed by the AI boom, and not by the larger cryptocurrency market.