AI Investment Bust Could Boost Bitcoin as Dollar Liquidity Expands

Arthur Hayes, co-founder of BitMEX, recently published an essay titled 'Safety First' in which he explored the potential impact of a decline in artificial intelligence investment on credit markets and cryptocurrency. According to Hayes, if AI demand weakens more than expected, it could put pressure on over $1 trillion worth of investment-grade corporate bonds tied to AI infrastructure, as well as hundreds of billions of dollars in lower-quality loans.

Hayes linked this view to recent moves by US AI companies to slow development. He argued that efforts by companies such as Anthropic and OpenAI to slow the push toward artificial general intelligence on safety grounds may actually reflect weaker-than-expected AI demand at current price levels. If AI demand weakens, spending on model training would decline, reducing demand for data centers and semiconductors.

Hayes suggested that a slowdown in AI infrastructure investment could eventually spill over into credit stress in related debt markets, increasing the likelihood of government intervention. In such a scenario, liquidity supplied through government support could flow into crypto markets, potentially becoming a catalyst for Bitcoin gains. Hayes believes that this could paradoxically make a collapse in the AI investment boom a tailwind for Bitcoin.