AI Bubble Collapse Predicts Massive Government Bailouts, Bitcoin Surge Past $1 Million

Arthur Hayes, Chief Investment Officer of crypto investment fund Maelstrom, has published an analysis warning that the current rapid expansion of artificial intelligence-related investments is not a technology bubble but a credit crunch-style collapse pattern similar to the 2008 financial crisis.

The AI bubble centers on data center construction loans, which Hayes compares to real estate projects rather than technology businesses. He criticizes financial institutions for treating these loans as if they were lending to Apple while taking on risks akin to lending to Lehman Brothers.

Hayes predicts that the pace of data center construction growth will begin decelerating from mid-to-late 2027, entering a clear contraction phase by 2028. During this process, borrowers with weaker credit profiles will default, triggering a chain-reaction credit crunch and necessitating massive U.S. government bailouts.

The collapse of the AI bubble will lead to a 'crack-up boom' in Bitcoin, according to Hayes, who predicts it will surge past $1 million. Maelstrom is currently focusing on Ethereum as its next trade opportunity, forecasting a rise to $5,000 by year-end due to its potential as the securities settlement layer for tokenized real-world assets.