BitMEX co-founder Arthur Hayes says an AI-driven economic shock could become the catalyst that sends Bitcoin (CRYPTO: BTC) and crypto into another major bull cycle, as central banks respond with aggressive liquidity injections.

The “Perpetual Motion Machine“

Speaking on the Unchained podcast, Hayes argued that the current AI boom is creating a dangerous mix of labor disruption, credit stress and speculative excess that could eventually force governments and central banks to print money again.        

Hayes believes the market is underestimating the deflationary shock AI could create in the short term.

Despite the near-term economic risk, Hayes remains structurally bullish on Bitcoin and crypto for one key reason which is liquidity.

He believes governments will ultimately respond to any AI-driven downturn the same way they responded to prior crises, by expanding credit and printing money.

That liquidity wave, according to Hayes, becomes the fuel for crypto markets.

Hayes said Bitcoin already started signaling tighter liquidity conditions earlier this year as AI-related deflation fears hit software and tech stocks.

He described the current AI spending boom as a "perpetual motion machine" fueled by hyperscalers racing to build the best models before competitors obsolete them.

But Hayes warned the frenzy eventually breaks when markets start questioning whether trillions in AI infrastructure spending can generate enough real-world returns.

Politics Could Become The Trigger

Hayes also sees rising political pressure building around AI. He argued most Americans are not benefiting directly from soaring AI-related equity valuations while simultaneously facing:

  • Higher electricity costs
  • Rising infrastructure expenses
  • Job displacement fears

That creates conditions for anti-AI political narratives heading into the 2028 election cycle, particularly if economic pain spreads beyond tech workers.

The longtime crypto trader said he remains heavily positioned in Bitcoin while also betting aggressively on higher-risk crypto themes.

The longtime crypto trader said he remains heavily positioned in Bitcoin while also betting aggressively on higher-risk crypto themes and the AI bubble.

Image: Shutterstock