Arthur Hayes sells HYPE, NEAR, WLD and ZEC and warns about AI

BitMEX co-founder Arthur Hayes draws a striking conclusion about the current state of the crypto market: artificial intelligence is sucking up the dollar liquidity that would otherwise flow to Bitcoin. Hayes is therefore selling a series of altcoins and preparing for a possible further downturn, but remains positive on Bitcoin in the long term.

Bitcoin is available at OKX and Bybit.

AI consumes the liquidity that Bitcoin needs

According to Hayes, the reason the Bitcoin price is not rising further despite looser liquidity conditions is simple: all the fresh capital is disappearing into AI stocks. As long as investors pour their money into AI en masse, there is little room left for crypto. And if that AI bubble then bursts, which Hayes sees as a realistic scenario, those same investors can no longer buy crypto because their capital is already tied up or lost.

He points to a combination of factors that could cause the AI bubble to burst: rising oil prices, selling pressure from large AI initial public offerings, and political developments in the US. That would also drag down crypto in the short term, but Hayes believes that Bitcoin will then shoot up once central banks turn on the money taps again. Currently, the Bitcoin price is at $62K, a decline of 0.4% over the past 24 hours.

Maelstrom dumps altcoins but holds onto Bitcoin and Ethereum

Hayes’s investment vehicle Maelstrom sold HYPE, NEAR and WLD last week. Zcash (ZEC) is also being offloaded, but for a different reason: a bug in the so-called Orchard Pool makes the position too risky to maintain. Hayes himself indicates that he would rather not have sold, but that capital preservation weighs more heavily for him than potential profit.

He does keep Bitcoin and Ethereum. He is sober but not pessimistic about Ethereum: the coin is functional in his eyes but lacks momentum. Since he has no immediate capital need, he simply leaves the position as is. To satisfy his trading urge, he is considering taking tactical short positions via derivatives. In doing so, he is playing on a possible further decline before the big recovery arrives. This fits into a broader trend in which well-known traders are becoming more cautious and scaling back their positions.