What happens when the world is trapped in endless wars, drowning in debt, and unwilling to raise taxes? According to Arthur Hayes, it sets the stage for one of the biggest crypto rallies in history.
Hayes outlined his macro thesis in a July 23 article, predicting that by the end of 2025, Bitcoin (BTC) could reach $250,000 and Ethereum (ETH) could reach $10,000. He argues that both military spending and strategic business investments are propelling the U.S. economy into a period of wartime-like credit expansion.
This surge in liquidity, he says, will find its way into assets that are scarce, global, and accessible, like crypto. Rather than seeing inflation as a threat, Hayes views it as the fuel for the next crypto bull run.
Hayes sees the current geopolitical order, particularly the expanding wars in Ukraine and the Middle East, as a catalyst for runaway government borrowing. Citing the U.S. defense budget, which surpassed $1 trillion in 2024, and expanding programs in Europe and Asia, he describes a global environment primed for aggressive fiscal expansion.
This surge in public spending, he notes, will be funded not by higher taxes but by central bank balance sheets. As real interest rates are forced negative to keep debt service sustainable, Hayes believes inflation will reignite, and risk assets like crypto will benefit most.
Hayes compares it to a new type of quantitative easing that subtly raises asset prices while directing capital into politically supported sectors. He believes that crypto is one of the few places this excess money can flow without causing social unrest.
Unlike food or housing, where rising prices hurt the average person, Bitcoin and Ethereum benefit from inflation without creating backlash. Crypto becomes, in his words, the perfect “escape valve.”
Hayes also notes a changing regulatory environment. With growing bipartisan support for crypto, retirement funds opening up to digital assets, and institutional players ramping up their involvement, the market may be on the verge of a new phase of adoption.
Trump’s second presidency, he suggests, could accelerate this trend through tax incentives and clearer regulation. The view that the supply of cryptocurrency is fixed whereas the supply of fiat currency is expanding quickly lies at the core of Hayes’ perspective.
