Arthur Hayes Says, “The AI Bubble Will Burst, Bitcoin Will Soar,” and Gives a Date

According to Arthur Hayes, the Critical Date is the End of 2027

Hayes believes that about two-thirds of the investment cycle in the AI sector has been completed, and the real turning point could occur at the end of 2027 or the beginning of 2028.

According to Hayes, large AI companies like OpenAI and Anthropic are committing to purchasing hundreds of billions or even trillions of dollars worth of computing capacity. However, it remains unclear whether these companies will have the financial strength to repay these investments once their data centers are completed.

Hayes, particularly highlighting the imbalance between the revenues and operating costs of AI companies, argued in the Anthropic example that when training and inference costs are taken into account, approximately $3 is spent for every $1 of revenue.

Hayes stated that demand for AI services might not remain at current levels once the true costs are passed on to consumers. He argued that this could jeopardize the financial sustainability of the massive investments made in data centers.

Why Bitcoin Could Profit From This Crisis?

Hayes’ optimism towards Bitcoin is based on the monetary expansion policies that governments and central banks could implement in response to a potential financial crisis.

Hayes argued that the current US debt structure is unsustainable and suggested that officials may eventually have to sacrifice the value of the currency to keep bond yields under control.

He pointed out that a crisis in France’s debt market could similarly trigger a large bailout package.

Hayes also argued that in economies with high debt burdens, interest rate increases may not always suppress inflation as expected. According to Hayes, rising interest rates can increase demand for financial assets by providing government bond holders with more interest income.

The renowned investor believes this mechanism is one of the factors explaining the increases in Bitcoin’s price.

According to Hayes’ scenario, a major financial collapse in the AI sector, while initially causing significant market fluctuations, could be followed by monetary expansion that provides a strong source of liquidity for cryptocurrency markets.

*This is not investment advice.