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0Arthur Hayes updated his outlook on market liquidity and Bitcoin’s trajectory in his keynote, “21 Weeks Later,” delivered at the Bitcoin 2026 Vegas conference.
Hayes argued that the market had previously been driven by an “AI deflation” thesis: AI boosts efficiency and puts pressure on high-paid white-collar jobs, which could weaken bank credit quality and weigh on Bitcoin and other risk assets. But as geopolitical tensions rise and the US shifts more clearly toward a wartime fiscal stance, he believes the market is starting to price in fiscal expansion, higher bank leverage, and a fresh wave of credit creation.
He also argued that concerns over Kevin Warsh potentially becoming Fed chair and pursuing an aggressively hawkish balance-sheet reduction are overblown. In Hayes’s view, what is more likely is a structural reshuffling between the Fed’s balance sheet and those of commercial banks. With regulatory easing, commercial banks could take on more Treasuries and repo assets while expanding lending to defense, resource extraction, and AI infrastructure. Hayes believes this new credit creation could outweigh the drag AI has placed on jobs and legacy credit demand, allowing liquidity conditions to turn positive again. On that basis, he remains bullish on Bitcoin and expects further upside this year.
Timeline:
Opening remarks
Why markets may treat the conflict as temporary
How AI deflation and job losses weighed on risk assets
The shift toward a wartime inflation and fiscal expansion narrative
Why Hayes questions the “super hawkish” Warsh view
A possible balance-sheet shift from the Fed to commercial banks
How banks could absorb more Treasuries and expand lending
Why Washington still shows no real appetite for austerity
Why US banks may become major buyers of new Treasury supply
Why banks could gain more room to lend
