While the recent stagnation and low trading volume in the cryptocurrency markets have confused investors, BitMEX co-founder Arthur Hayes has offered some noteworthy analysis.
Hayes stated that all the fresh money being injected into the market is being “swallowed up” by the AI sector, creating a crowding-out effect in crypto assets.
Hayes stated that since ChatGPT achieved commercial success in November 2022, AI-driven borrowing and capital expenditures (capex) have reached trillions of dollars.
The renowned analyst, noting that AI spending nearly doubled in 2026 following Bitcoin’s peak in 2025, stated, “AI has seized the marginal dollar. There’s no cash left to invest in crypto. Investors are opting for AI, the fastest horse right now, to prevent their money from losing value.”
However, Hayes stated that this situation is unsustainable and that he expects a major “AI collapse” in the technology world within the next 3 to 5 years. Predicting that factors such as open-source models from China offering services at 1% of San Francisco prices and the rapid obsolescence of hardware (GPUs) will burst this bubble, Hayes argued that a crisis similar to the 1999 Dot-com bubble or the railroad craze is on the horizon.
Hayes, who stated that he had previously made successful trades and realized profits in AI-focused crypto projects like NEAR, said that the AI narrative has now become a “consensus” and the risk/reward ratio has changed.
Hayes explained that he turned his attention to Ethereum, stating that he was seeking much greater asymmetric returns and capital protection in the new period.
“If I believe the AI theme will gain momentum again in the second half of the year, I would look for a large-scale altcoin that is currently hated, forgotten, and hasn’t yet surpassed the peaks of the past bull cycle (2021-2022). Ethereum fits this description perfectly. Ethereum is a battle-tested, decentralized computer and network that has been on the market for years. There is no risk of it going to zero. When other investors, like me, are looking for asymmetry, the right time for ETH will have arrived.”
Hayes also touched upon the “Clarity Act” vote in the US, which is expected to bring legal clarity to DeFi and crypto assets, claiming that it is actually insignificant for the market.
Referring to his banking and hedge fund background, Hayes criticized, “If DeFi needs a US regulator to exist, then we’ve failed at building decentralized systems. Traditional financiers don’t care about regulations; if an asset is profitable, they’ll find a way to convince compliance departments to trade it.”
