- Arthur Hayes predicts Bitcoin will hit new all-time highs in 2026 as dollar liquidity expands.
- BitMEX founder Hayes forecasts BTC reaching $500k in 2026 driven by monetary expansion.
- Hayes sees Bitcoin surging in 2026 as Fed policies and government spending boost liquidity.
BitMEX co-founder Arthur Hayes has issued a bullish forecast for Bitcoin, predicting the cryptocurrency will reach new all-time highs in 2026. His projection centers on an anticipated expansion in dollar liquidity that he believes will fuel significant price appreciation.
Liquidity Expansion as the Catalyst
Hayes outlined his thesis in a recent essay titled “Frowny Cloud.” He identified several factors that will drive dollar liquidity growth. Federal Reserve balance sheet expansion through monetary policy actions tops the list. Declining mortgage rates and increased commercial bank lending to strategic U.S. industries will add momentum. Government fiscal measures supporting economic expansion complete the picture.
The Fed’s balance sheet, Source: Frowny Cloud
The BitMEX founder emphasized the role of military spending in this equation. Production of defense equipment requires substantial financing from the commercial banking system. This activity injects liquidity into the economy, creating conditions favorable for Bitcoin appreciation.
Hayes has previously stated Bitcoin could reach $500,000 by the end of 2026. His latest analysis reinforces this view. When the money supply expands, investors typically shift toward riskier assets as inflation erodes the dollar’s purchasing power. Bitcoin historically benefits from this dynamic.
Understanding 2025’s Price Decline
Bitcoin currently trades at $96,241, having experienced turbulence throughout 2025. The cryptocurrency dropped below $85,000 following a major market crash on October 11. This marked a sharp reversal from its record high of $126,000 achieved just weeks earlier. The digital asset has struggled to reclaim the $100,000 threshold since then.
Hayes attributed the weakness to contracting dollar liquidity rather than fundamental problems with Bitcoin itself. Government intervention redirected capital flows toward artificial intelligence investments through executive orders and targeted spending programs. Technology stocks surged as a result, posting returns of 24.6% to 6.6% within the S&P 500’s tech sector. This outpaced the index’s overall 18% gain.
The capital that might have flowed into cryptocurrency went elsewhere. Hayes emphasized that traders should not misinterpret Bitcoin’s performance in 2025. The underlying cause was liquidity conditions, not a breakdown in Bitcoin’s value proposition.
Hayes characterized Bitcoin as “monetary technology” whose value correlates directly with the debasement of fiat currency. He argued that this relationship ensures Bitcoin maintains a value above zero, regardless of market conditions. The cryptocurrency serves as a hedge against currency depreciation when central banks expand money supplies.
His analysis suggests that 2026 will see a reversal in liquidity conditions. If gold and the Nasdaq benefit from increased dollar liquidity, Bitcoin should follow suit. The convergence of Federal Reserve policy, banking sector lending, and fiscal stimulus will create the environment necessary for Bitcoin to regain momentum and establish new price records.
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