In his latest provocative essay, “The Butterfly Touch,” BitMEX co-founder Arthur Hayes declares that the crypto bull market has entered a manic phase. Hayes argues that the intersection of AI nationalism and global military conflict is creating a perfect storm for digital assets. He contends that the world is witnessing an unprecedented expansion of fiat credit, driven by the existential need for nation-states to achieve machine intelligence supremacy and secure physical resource chains.
AI Nationalism and the Credit Orgy
Hayes identifies the current AI infrastructure build-out as a primary engine for money printing. He notes that both the US and China view AI dominance as integral to national security, leading to a Red Queen Effect where massive capital expenditures (CAPEX) must constantly increase just to maintain parity with rivals. This race creates Jovan’s Paradox: as the cost per unit of intelligence declines, the demand for compute, and the credit required to fund it, increases exponentially.
According to Hayes, this orgy of construction is no longer funded solely by corporate cash flows. In China, banks are being directed away from real estate and toward tech, while in the US, the Federal Reserve and commercial banks are loosening financial conditions to support data centers and electricity generation. For crypto investors, this means a rapidly accelerating supply of fiat currency that will inevitably seek refuge in fixed-supply assets like Bitcoin.
War, Inflation, and the End of Just-in-Time Logistics
The essay points to the US-Iran conflict, which began in earnest on February 28, 2026, as the definitive starting gun for the current bull run. Hayes argues that war is inherently inflationary and forces a fundamental shift in global sovereign investment strategies.
Nations that previously saved their surpluses in “fugazi” dollar financial assets (like US Treasuries) are now liquidating those holdings to build pipelines, defense systems, and stockpiles of food and energy. Hayes suggests that the just-in-time logistics model is dead, replaced by a just-in-case philosophy. To prevent a financial crisis caused by foreigners dumping US debt, Hayes expects the US Treasury to leave financial conditions loose, using dollar swap lines to provide liquidity without dampening domestic markets.
Bitcoin’s Path to $126,000 and the Shitcoin Narrative
Regarding price action, Hayes is unapologetically bullish. He notes that Bitcoin has outperformed gold and tech stocks since the war’s onset, signaling its extreme sensitivity to fiat liquidity. He predicts that Bitcoin will retake its $126,000 target as a foregone conclusion, with the rally intensifying once the price punches through $90,000, triggering a massive short-covering surge.
Beyond Bitcoin, Hayes revealed that his fund, Maelstrom, is pivoting toward high-conviction shitcoins. He specifically highlighted NEAR, citing a thesis that the “privacy narrative” combined with “Near intents” will create a positive cash flow situation for the protocol. He also maintained large positions in Hyperliquid (HYPE) and Zcash (ZEC), urging investors to “close your eyes and press the button” as the liquidity wave peaks before the 2028 election cycle.
