- Hayes views Bitcoin’s 2025 weakness as a liquidity issue, not a structural problem.
- Expanding dollar supply has historically supported BTC price growth.
- He expects 2026 to be a turning point for Bitcoin’s next major rally.
Bitcoin has spent much of 2025 struggling to regain momentum, but BitMEX co-founder Arthur Hayes believes the story is far from over. In his latest essay, Frowny Cloud, Hayes argues that Bitcoin’s weakness is not a failure of the asset itself, but a reflection of tight dollar liquidity — a condition he expects to reverse in 2026. If that shift materializes, he says, Bitcoin could push to a new all-time high next year.
Rather than focusing on short-term price action, Hayes frames Bitcoin as a macro-driven asset whose fortunes rise and fall with global liquidity conditions, particularly those tied to the U.S. dollar.
Dollar Liquidity Is the Missing Ingredient
At the center of Hayes’ thesis is a simple idea: Bitcoin performs best when dollars are abundant. He points to several forces that could expand liquidity over the next year, including a growing Federal Reserve balance sheet, easing mortgage rates, and increased bank lending to government-backed strategic sectors.
Hayes also highlights fiscal spending as a key driver. From infrastructure to defense, large-scale government programs require financing, often routed through the commercial banking system. That process, he argues, ultimately increases the supply of dollars circulating through the economy — a backdrop that has historically favored scarce assets like Bitcoin.
In inflationary or liquidity-heavy environments, investors tend to move beyond cash and bonds, searching for assets that can preserve value. Bitcoin, in Hayes’ view, sits squarely in that category.
Bitcoin’s 2025 Decline Wasn’t About Crypto
Bitcoin’s price action in late 2025 was rough. After reaching a record high near $126,000, BTC slid below $85,000 following a sharp market crash in October. Since then, it has struggled to reclaim the $100,000 level, even as other risk assets rebounded.
Hayes argues this divergence tells an important story. While crypto stalled, technology stocks surged, becoming the strongest-performing segment of the S&P 500. He attributes that gap to policy-driven capital flows that favored sectors like artificial intelligence, not to any fundamental weakness in Bitcoin.
From his perspective, liquidity was simply directed elsewhere. Crypto didn’t benefit — but that doesn’t mean it won’t.
Bitcoin as Monetary Technology
Hayes repeatedly describes Bitcoin as “monetary technology,” meaning its value is closely linked to confidence in fiat currencies. When governments expand money supply or blur free-market signals, Bitcoin’s fixed supply becomes more attractive over time.
That’s why Hayes remains confident despite recent volatility. He sees Bitcoin’s long-term value as anchored in currency debasement, not quarterly performance. If dollar liquidity expands as he expects, he believes Bitcoin could regain momentum quickly — potentially validating his broader prediction of a massive rally by the end of 2026.
Also Read: Bitcoin ETFs Just Pulled In $843M — Is Institutional Demand Back?
Arthur Hayes’ outlook reframes Bitcoin’s recent struggles as a macro liquidity pause rather than a structural decline. If his thesis proves correct, 2026 could mark a decisive shift, with expanding dollar supply acting as the catalyst for Bitcoin’s next major move. For investors watching the bigger picture, the message is clear: follow the liquidity.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of CoinBrief.io. Before making any investment decisions, you should always conduct your own research. CoinBrief.io is not responsible for any financial losses.
