Arthur Hayes says crypto markets are crashing because the community can’t agree on why they’re crashing

Arthur Hayes says the crypto crowd is getting hit while still fighting over the reason for the drop. In his latest essay, Arthur warns that: “I don’t know anything about war fighting,” and makes clear he has no inside line into what global leaders may do next.

What he does say he has is public data, basic math, propaganda AI agents, and a portfolio to protect.

He says there are really four possible outcomes, but one is useless for investors. Nuclear destruction is not something he thinks anyone can trade around, so he throws it out. That leaves three main paths, plus one middle case tied to a US blockade. Arthur says he is trying to find a portfolio setup that can beat hydrocarbons, food, and fuel prices in the best case, and in the worst case still do better than most major assets.

Arthur Hayes says Bitcoin comeback is waiting for Fed liquidity injection

In the first case, Arthur says the war stops and things go back to what they were before, but that still would not solve the deeper problem because the bigger threat is AI replacing white-collar workers across the US economy.

“The American economy is the most exposed because its GDP is ~70% driven by consumer spending. Consumers finance their materialism using bank credit, and these loans become assets on banks’ balance sheets,” says Arthur.

Arthur says the AI-led bust could be as serious as the 2008 subprime mess. He writes that rising consumer delinquencies are already showing up before the real layoff wave has even started.

He also gives a story from a crypto gaming founder who tested the latest Claude model during Christmas 2025, built usable code fast, then brought top engineers together to rethink the company.

After that, the firm built an agent workflow that coded all day and all night, including code review. He says that led the company to plan cuts to 50% of staff. He adds that top engineers may get 10x to 100x more productive, while average workers get pushed out. He says the median annual unemployment payout in US states is about $28,000, far below the $85,000 to $90,000 earned by many knowledge workers.

That gap, according to Arthur, leads straight to missed debt payments. Even then, Arthur says Bitcoin may only get a limited bounce, maybe to $80,000 or $90,000, until the Fed steps in with real liquidity.

Arthur tracks yuan tolls, oil stress, and money printing through Bitcoin, gold, and bonds

In the second case, Arthur says Iran keeps control over the Strait of Hormuz and lets friendly ships pass after paying a $2 million toll in yuan, crypto, sanctioned dollars, or other deals.

He says that would hit the petrodollar hard. Since most big economies run trade deficits with China, they would need to sell US Treasuries or tech stocks, buy physical gold, then swap that gold for yuan in Shanghai or Hong Kong. He notes only Brazil and Russia among the ten biggest economies run trade surpluses with China.

Arthur pointed out that foreign securities holdings at the Fed dropped $63 billion after the war started, while non-monetary gold became the biggest US export in four of the last five months, up 342% from a year earlier. He also says Swiss refineries are recasting US gold for China and that rising CIPS volumes matter because Iran cannot use SWIFT. As Arthur puts it:

“The yuan and gold will most likely become the two primary currencies of sovereign trade. If holding dollars cannot guarantee pirates won’t tank your stuff, why hold them at all?”

In the third case, the US military reopens the strait by force. Arthur says that could briefly restore faith in the dollar, but it could also destroy Iran, wreck Gulf energy output, and force central banks to print into a commodity spike. He writes, “The spice definitely won’t flow.” He says some countries would face hyperinflation, while America and Russia would be the only big swing producers left.

For Bitcoin, Arthur says, “If the blockade ultimately ends via a punitive bombing campaign of Iran followed by an Iranian destruction of all Persian Gulf energy production, this could lead to the destruction of the Iranian state. The rally in Bitcoin, inspired by money printing, might be short-lived because the destruction of the Iranian state materially raises the prospect of WW3.”