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Arthur Hayes Says AI Layoffs Are Coming for the Banking System | Markets Outlook
00:16:43
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- [00:00]
A
Foreign, We're going to kick things off with a bit of a banger here. He spent the first quarter of 2026 in self imposed silence called crypto a no trade zone, while the rest of the market tried to find a floor and will be taking the consensus main stage this morning to tell us exactly when he plans to flip the switch back on. Chief investment officer of Maelstrom and co founder of Bitmex, Arthur Hayes joins the show. Arthur, hello. Nice to see you.
- [00:33]
B
Excited to see you guys.
- [00:34]
C
Great to have you here.
- [00:35]
B
Yeah, thank you.
- [00:35]
A
All right, we're in Miami, obviously. You told me.
- [00:41]
C
Thanks, Jen.
- [00:41]
A
Yeah, I think the last time we spoke you said you were excited about hitting the club. Yeah, and so I hit it real
- [00:49]
B
hard three days in a row. You did, yeah, it was great. F1 weekend was amazing. Thank you for having this conference and finding me an excuse to come here.
- [00:56]
A
Well, thank you for showing up. I mean, three days in a row and now you're here. All right, you heard my intro. You published your no trade zone essay. What happened in Q1 that changed your calculus since the last time you and I spoke?
- [01:09]
B
So obviously we had the sort of a scare in the first quarter. Tech stocks got crushed, these SaaS stocks in the United States. And I put out a thesis that I think Bitcoin was telling us that there's not enough money being created to forestall this deflationary event of people losing their jobs, not being able to service their debts. And that's what Bitcoin was telling us. And you know, that progressed up until February 28th when the US and Iran war started. And I think we switched into a wartime economy, not only in the United States, but across the world. And that means more money printing and at least the United States, that's going to mean that the Fed and I think the commercial banking sector is going to take up the baton and start issuing loans, increasing credit. And that's why Bitcoin has outperformed the NASDAQ tech stocks and gold since February 28th are there.
- [01:57]
D
We keep hearing about this potential of AI to really reimagine the entire sort of labor ecosystem. Where do you think this is going in the next, like two, three, four, five years when it comes to like this disruption? Is it a slight disruption? We saw Coinbase's announcement this morning. Or is this a major one that we should all be prepared for very soon?
- [02:17]
B
So. Because at least in some advanced Western economies like the United States are very leveraged, it doesn't take that many people to lose their jobs. For this to be a problem. So I know in some respects, some people deride this argument, saying not everyone's going to lose their jobs because of AI. People will find new things to do. And I don't disagree with that. My point is that let's take the bottom 10 to 20% of knowledge workers who no longer have a purpose, at least in the short term, say next one or two years in a company like Coinbase and Block and these tech companies that can now automate the coding of tech using AI. And they're firing, I think, what, 14%? Is that what Brian said? Coinbase and other companies, it's 20, 30, 40%. So you're talking about the bottom tier of workers. You still make quite a bit of money who no longer have a job. And nobody is hiring those type of workers right now. So how are they going to pay their mortgage, their credit card payment, or just consume at the level they were consuming pre this sort of disruption? And that's what I'm saying. This is an overleveraged global economy. And if you move the people who make the most money, who consume the most from that equation, then you're going to have an issue, at least in the banking system.
- [03:20]
C
I mean, look, late last week we saw CBO make an announcement that they're going to. It's kind of like a double pronged approach. They're going to lay off 20% of their staff and they're going to refocus on things like tokenization and growth aspects of their business. So refocus on exactly what their core business is and lean into things like tokenization. So this is a real tradfi player that is trying to find a way to kind of wedge its way into crypto. How are they going to fund that? They're going to take advantage of some of this technology disruption and reduce their workforce. So to agree with you, Arthur.
- [03:51]
A
Yeah, you know, just unpack that a little bit for our audience. You know, you said that we're going to have an issue in the global, global banking system. What does that look like? Like, just talk to us a little bit more. I think people are probably watching this interview and wondering, you know, what does this mean for me? What are the next month's year? What is it? What's that going to.
- [04:08]
B
So, you know, every loan is an asset at a bank, right? And so if you have credit card payments, auto loans, mortgages, somebody is servicing that debt. And at the higher income end, you know, 100, $200,000 a year annualized income, they have A lot of debt and they're paying it off. And they were paying it off quite fine. Once you lose your job, then you're on unemployment, at least in the United States. And that caps out in like 30, $40,000 a year. So you were earning say 150,000. Now you're earning 40. And what do you do? You have to cut back on spending. You're not going to the fancy restaurants, the malls. You're not buying the discretionary items. And you Certainly using these SaaS, companies like Adobe and all these sorts of things, right? These are why these companies are getting crushed. And then you think about consumer finance. Well, if the bank cuts it as an asset, and now you have an asset that was paying fine and worth 100, now it's worth 0, you have a hole in your balance sheet. And what do we know what happens when it happens? The Fed comes and prints money, but as we stand right now, the Fed believes, and every other central bank believes that AI is a productivity enhancer. We're going to grow. There's not going to be inflation. So therefore they don't need to provide more money. And so until it's recognized, that is what I think Bitcoin is saying, hey, we're not printing enough money. We're not recognizing this problem is going to happen in the next, say, six to 12 months. Therefore, you know, bitcoin is going to fall alongside some of these tech stocks.
- [05:19]
C
I would say that, like the market is always true. And so just what I was talking about, SIBO, the stock rallied like 8, 10% last Friday. And I think that the fact that Bitcoin is responding to this truth in the market is more telling us that this is an asset that now has ubiquity and it has broad enough adoption that it's going to act in a way that's going to tell us what's happening in the market in a much more efficient way than it has in the past.
- [05:42]
D
So, Arthur, I love that you're. You've been someone who sort of is not as excited as the rest of the industry about, about the Clarity act, that when it comes to stablecoin coin legislation, you really believe it's just a rush into Treasury. It may not actually help the dollar, or might it help the crypto in general? Where are you thinking this is going considering the fact that, you know, Friday seems to clear a hurdle when it comes to stablecoins?
- [06:10]
B
So, I mean, I'm going to give a presentation in a few minutes about how crypto needs no regulation and the Price performance is indicative of that. And so I think, yeah, regulation. Some people who own centralized companies obviously want this and that makes complete sense. Like if you own a centralized company, you want a regulatory mode around your business. Of course you're going to lobby politicians to get what you want. We'll see what happens at least in the United States and other countries around the world. But that does have, that has no effect on whether bitcoin or crypto is effective. The reason why we're all here, why is Bitcoin worth, was it 82,000 or whatever it is instead of zero? Is because it has some utility. It has a utility outside of the tradfi banking system. If it was just another fixed supply asset that was on traffic balance sheet, we wouldn't have this conference right now because there'd be no point. Like you can just go on your brokerage account and buy Bitcoin in an ETF or whatever wrapper and it does nothing. It doesn't help you transfer value outside of the banking system, outside of state control. And so I think that everyone who's clamoring for these regulations doesn't understand why this is valuable in the first place. Why do clients actually want to own this thing? It's because it does something different. And so if you take that difference away and it's just another asset on the bank's balance sheet, then what are we doing here?
- [07:18]
C
Yeah. So if I, I accept everything that you've said there, how do you balance that with like, further clarity, no pun intended, on the regulatory side is going to bring much larger scale global players into the ecosystem that allows in its entirety, you know, crypto to grow or
- [07:34]
B
bitcoin to grow, I'd say. I don't care if they come. The, the white paper is there, it works. If that's something that you want to integrate in your business or you believe your clients need that asset, you'll find a way. Just like you found a way from, you know, 2009 till the present. Just because there's been what the, whatever. The bill was passed. Genius act, the only bill in the United States that's passed since crypto has been around. Yet we're here, right? Worth however many trillions of dollars, in spite of the fact that there has been no clarity. So what is clarity going to bring? Nothing. Unless there's. What I can argue is there's more money printing. Otherwise there's no value here because it's just another asset on a bank balance sheet. And we know how to trade those. You know how to Value those and they're worth what they're worth. But it certainly doesn't mean anything exciting, which is why people get out of bed and come into these conferences and speak.
- [08:19]
A
I know your bitcoin target is $500,000. I'm not sure if that's changed.
- [08:23]
B
Since when did I say that? I change it all the time.
- [08:26]
A
Every time I ask you, I think it's different. Okay, what's your target? Why don't we start?
- [08:31]
B
I think I've gone down like 125 into the year.
- [08:33]
A
Okay, okay, okay. So. So what needs to happen to get us there? I'm assuming it's more money printing.
- [08:38]
B
More money printing? Just that simple? I try to make it very simple. Right. Bitcoin is a combination of a tech stack which works, and it's liquidity. That's all that matters. It's a fixed supply asset. How many units of fiat are there today? How many will there be in the future? If there's more in the future than today, then Bitcoin will be more valuable. That's. That's all that matters. And so if the, if I my thesis on the pace of central bank and commercial bank money printing in the US and around the world plays out, then Bitcoin will be more valuable. In spite of whatever happens with the war and spite. Spite of this deflation that's coming, I think that the amount of money that's going to be created to re. Industrialize around the western world to build more bombs, that's going to. What's going to propel bitcoin higher?
- [09:22]
D
You have a 125k target right now in bitcoin. What's your hype target?
- [09:26]
B
And hype is $150 by August. Sticking with it.
- [09:30]
D
Why are you so bullish on Hyper Liquid? I mean, I feel like half your tweets are really about. About this technology and you, like many others, are just very, very excited. What's your core thesis of why our audience should be paying attention to Hyperlic?
- [09:43]
B
So the killer app in crypto has been trading apps. Obviously, I've made all my money in a trading application. CZ and Ryan Armstrong, some other wealthiest people in crypto have made all their money in trading applications. And so Hyper Liquid is just following on from the theme that we started, which was, okay, how can we let anyone trade anything anywhere around the world, whenever they want, with high leverage? And the dream was, let's create a permissionless way so that anyone could trade these things. DYDX was the first sort of darling that started without in like 2020, 2021 passed at the time. GMX and then Jeff and Hyperliquid have sort of taken this to the next level where they've said, okay, we've got really good tech, it's really fast. And they've got a great token, token model where all the revenue, 97% of all revenue earned. But the protocol goes back to the token holders in the form of buybacks.
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C
Right.
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B
There was no VC round and so you had a clear path for this thing to appreciate and gain traders and that's what they've done. I think it's about 6 or 7% of sex volume on perps and the dominant decentralized exchange trading platform. And now with HP3, which has proven itself on the weekend periods when traffic markets are closed, you could trade oil, you can trade S and P, you can trade NASDAQ with high leverage wherever you want around the world 24 7. And it's a price discovery mechanism during this period of global uncertainty.
- [10:59]
C
Yeah, I think the trade XYZ volumes, top three volumes are two oil. It's either, you know, oil and Brent and then the s and P500. Well, so I mean those are trading across the board. And certainly when traditional markets are closed, it's a, it's a model that works.
- [11:14]
A
Arthur, we want the alpha. We want spicy takes. We talked about bitcoin, we talked about hype. Give us something. What else are you, what else are you watching? What might people be surprised that you're maybe paying attention to right now?
- [11:29]
B
I mean, I think at least for my investing strategy, it's like concentrated bets on things that I know that work. I've analyzed my trades over many years and you know, I fuck around in meme coins and some of the dog shit shit coins and I pretty much always lose money. So I'm trying to make a. I'm trying to make myself a better trader. So I believe in hype. I've written a massive essay about it. I believe in zcash and the privacy theme. And I have to say those are my two biggest bags right now in the shitcoin space. And I continue to add to those. And I think they're going to outperform given how large of a crypto asset they're relative to everything else.
- [12:01]
D
The, the conversation on privacy I think is so essential right now. As we look at all these regulators coming in, as you look all the institutions coming in, they're not going to want to be exposed. Right. So is part of the thesis there to say, okay, regardless if it's good thing or bad thing that institutions are coming into crypto, they're still going to want to perform in a way that is compliant to their business, which, which means let's not make everything exposed. Let's be able to sort of pick and choose and, and select the levers of privacy. Is that sort of where you think that zcash really plays a role?
- [12:32]
B
Well, I think it's that people understand that as we have, you know, big data sets that are owned by tech companies and the governments combined with really, really good AI, you could de anonymize any transaction pretty much on Bitcoin pretty easily. Now that's not a problem because Bitcoin never said it was supposed to be completely anonymous. But there is a role for private cash on the Internet and that's what I believe zcash represents. And people are going to gravitate to that who want those things.
- [12:59]
C
So I'm going to switch gears a little bit and go prediction markets. Because I'm just curious, where do you think prediction markets fit into the whole bag and how do you think that market is going to grow in a way where there's kind of an institutional quality or the potential for larger liquidity pools because we're going to want to pull institutions in or do you think we shouldn't?
- [13:17]
B
I think prediction markets are amazing in that they're price leaders of information about random events. Right. So people were saying, okay, well is the US going to attack around this weekend when they look at the polymarket and they see if there's a trend following because somebody is using insider information to trade on it. I think it's a great signal. I don't know how much liquidity that's going to bring at the end of the day. But what I'm really excited about prediction markets is binary options. And so I've said this, this is why I think HP for on hyper liquid is going to do so well is they're going to launch, you know, one minute, five minute up down markets on Bitcoin theorem and a lot of other assets and they're going to bring a lot of liquidity to that market. That's not something that institutions really like to trade. And that's why I think hyper liquids want to take that market for the retail display across the world. Who want these things.
- [14:02]
C
Yeah, the appetite for leverage globally, outside of the U.S. the appetite for leverage is amazing. And we see it in 2x3x4x index based products that are listed around the globe and the opportunity to kind of trade those with as much kind of juice as possible is something that's super attractive. So I agree with you that the prediction markets are going to offer that opportunity direct to retail and not go through an institution as an index guy and a benchmark guy that wants to have a precision about how to settle those trades. It's one thing if you have a sports score and we could all agree that, you know, whatever, the Knicks won last night by 38 points or whatever it was, but when you're talking about something like, you know, when or if the US is going to invade Iran, and you take a look at the settlement price of that or the settlement methodology of that, and it says we're going to rely upon some relevant source of media, these things get pretty complex to settle them. So I think there's going to be a reckoning in the prediction markets of what's going to be successful, what's not going to be successful. But certainly short dated binary options are something that you can have real precise settlement on. And we're excited to watch that market develop as well.
- [15:13]
A
You know, something I hear a lot from our guests is that with the rise of prediction markets and institutional adoption, altcoins are going to die. I would love to hear your perspective there.
- [15:23]
B
Altcoins will never die. I love shit coins. I think it's a great market. Obviously 99% of these things are going to go to zero. But I forgot who gave this stat something about the S&P 500. And if you look over time, I think since 1929, something like 98% of all companies in the S&P 500 have gone to zero. Right? So you take a look at just the stock market in, you know, the largest capital markets in the world, the United States, most stocks are shitcoins over a long enough period of time. So if we're going to compress that time period by letting anyone trade 24,7, of course most altcoins are going to zero. But if we want the most innovative things and letting people raise capital and, you know, trying things out, this is a great model. So they'll always exist, just as shitcoin stocks have always existed.
- [16:07]
C
I always say that instead of saying token or coin, just replace that with software. And all of a sudden everybody gets much more comfortable with the fact that there are so many pieces of software that get built that fail. And so, you know, I just think it's going to be cyclical in nature. More will come on when there's capital available to deliver those solutions. And some are going to win. Some are going to fail.
- [16:26]
A
All right, Arthur, we got to leave it there. Thank you for kicking off the program with us. Maybe we're going to see you in the club later.
- [16:32]
B
Thanks for having me. It.