AI Credit Bubble Warning: Bitcoin Could Hit $1M

Former BitMEX co-founder Arthur Hayes has sounded the alarm on what he believes could be an AI-driven credit bubble. In a recent blog post, Hayes argued that the boom in AI infrastructure spending is being fueled by lenders extending large amounts of money for data-center construction and power buildouts.

Hayes draws parallels to the 2008-style credit cycle, suggesting that when growth slows down, weaker borrowers will be exposed, leading to a potential government liquidity response. He believes this could inject significant risk assets into the broader market, with Bitcoin potentially rallying far beyond current levels.

Hayes specifically highlighted the example of Oracle's debt, which he noted was about 4.3 times its earnings before interest, taxes, depreciation, and amortization. He also referenced Reuters reporting that Microsoft, Meta, Oracle, Amazon, and Alphabet have committed around $1.09 trillion to leases for data centers.

In his forecast, Hayes predicted Bitcoin could remain in a range of $60,000 to $70,000 with downside risk to $50,000 before any credit-driven recovery. He also forecast Ether could reach $5,000 by year-end and said his firm Maelstrom plans to accumulate while selling out-of-the-money ETH puts.