Arthur Hayes Calls Bitcoin Cycle Bottom, Targets $126,000 as AI and Defense Spending Fuel Liquidity

BitMEX co-founder and veteran macro trader Arthur Hayes has declared that Bitcoin has set its cycle bottom near $60,000 and is now on a trajectory toward retesting its all-time high of $126,000. In a new essay titled "The Butterfly Touch," published on May 12, 2026, Hayes laid out a detailed macro thesis connecting AI infrastructure spending, wartime government liquidity, and Bitcoin's next major rally.

Hayes identifies $90,000 as the critical trigger level for the next leg of the bull market. According to his analysis, once Bitcoin breaches $90,000, call option sellers will be forced to buy the underlying asset to hedge their positions — a dynamic known as a gamma squeeze — which would mechanically accelerate the rally toward new highs. The same pattern played out during previous Bitcoin bull cycles and has historically been one of the most reliable indicators of a trend acceleration.

The macro argument behind Hayes' thesis centers on two powerful forces: AI infrastructure investment and defense spending. Governments and corporations worldwide are pouring capital into artificial intelligence data centers, chip manufacturing, and military technology. Hayes argues this wave of credit expansion is fundamentally inflationary and will push investors toward hard assets like Bitcoin as a store of value. In wartime and AI-boom periods, he contends, liquidity flows into risk assets — and Bitcoin is increasingly seen as the premier risk-on, inflation-resistant asset.

On the macro front, Bitcoin dipped 1% to around $80,400 on May 13 as rising Middle East tensions — specifically President Trump's warning that the Iran ceasefire is "on life support" — pushed oil prices above $107 per barrel and strengthened the US dollar. Equity futures sold off on the news, briefly dragging crypto markets lower. However, Hayes and other analysts see these short-term geopolitical shocks as buying opportunities rather than structural threats to the bull case.

Adding to the bullish backdrop, the US Senate confirmed Kevin Warsh to the Federal Reserve Board on May 12, positioning a figure widely considered crypto-friendly to potentially succeed Jerome Powell as Fed Chair. A more accommodative monetary policy environment would provide additional tailwinds for Bitcoin and risk assets broadly.

Bitcoin is currently trading around $80,500, approximately 35% below its October 2025 all-time high. If Hayes' thesis proves correct and the $90,000 gamma squeeze trigger is reached, the move to $126,000 could unfold faster than most market participants expect. For long-term holders, the current price range may look like an attractive entry point in hindsight.

As always, this article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always do your own research before making any investment decisions.