Arthur Hayes: Q1 is almost zero, and the AI unemployment wave and the Iranian war have kept me on hold

Original by Arthur Hayes

Original language: Deep tide TechFlow

Introduction:BitMEX founder Hayes rarely admits he's almost non-tradable for a quarter. In his view, the market was standing on two cliffs: AI, which would destroy a white-collar job in the United States, and the Iranian war, which could have completely rewrited dollar hegemony. Bitcoin may fall first, but eventually it will win all mainstream assets。

(This paper represents only the individual views of the author and should not serve as a basis for investment decision-making, nor should it be seen as a proposal for investment transactions. I'm not sure

Want to know more? Focus on Authors 'Instagram, LinkedIn and X

Because the Maelstrom Fund deals very cheaply in a quarter, many brokers occasionally contact me to ask me what I think about the market and what they can do for us. My answer is, "This is a non-tradable area." Apart from slowly increasing our multiple positions in Hyperliquid, we barely made any deals in the quarter. The combination of two factors creates a trading dead zone, at least for our pure multiposition。

The proliferation of AI agents will destroy the career prospects of common knowledge workers in Western developed economies (mainly the United States) with flexible labour markets, which will trigger deflationary financial collapses. I wrote about this in The Is Fine. Since that article, in order to turn Iran into the newest dump, United States President Trump, supported by Israeli Prime Minister Netanyahu, has launched a selective war against Iran. The only important issue, which has been the war for almost seven weeks, is how the movement of goods and services in the Strait of Hormuz will be organized。

I always say when I say war or geopolitics, I'm just a simple ski lover, a encrypted money player who jumps house music. I have no intel on what war or global leaders will do. But I can read mainstream propaganda narratives and use AI agents to make simple calculations using public information. I tried to pull out the noise and focus on something important for my portfolio. Fortunately, I do not live in Levant or the Middle East, so my life and freedom are not at risk。

In my simplified view of the world, there are three scenarios to consider; in fact, there are four, but the fourth nuclear war cannot be invested, so there is no need to write. I'll present every one, and I'll explore in depth how they might affect bitcoin prices. I don't know what the probability is in each case. But what I want to figure out is whether there is a portfolio configuration that can, in the best of circumstances, win the prices of hydrocarbons and their derivatives, such as food and fuel, and, in the worst of circumstances, all major asset classes, while losing the price of hydrocarbons。

Scenario 1: return to normal

IN THAT CONTEXT, THE WAR ENDED IMMEDIATELY AND THE PRE-WAR STATUS QUO WAS RESTORED. HOWEVER, THE LONG-TERM TREND OF REPLACING EXPENSIVE DIGITAL SYMBOLS WITH CHEAPER, MORE EFFICIENT AI AGENTS CONTINUES. THE UNITED STATES ECONOMY IS THE MOST VULNERABLE BECAUSE ABOUT 70 PER CENT OF GDP IS DRIVEN BY CONSUMER SPENDING. CONSUMERS USE BANK CREDITS TO FINANCE MATERIAL CONSUMPTION, WHICH BECOME ASSETS ON THE BANK ' S BALANCE SHEET. IF THE SOLVENCY OF ORDINARY INTELLECTUALS DISAPPEARS, THESE BANKS WILL BE EFFECTIVELY UNAFFORDABLE AND WILL REQUIRE LARGE AMOUNTS OF BANKNOTE PRINTING BY CENTRAL BANKS。

Scenario 2: Tehran Station

IN THESE CIRCUMSTANCES, THE UNITED STATES MILITARY IS UNWILLING OR UNABLE TO PREVENT IRAN FROM RESTRICTING THE PASSAGE OF VESSELS THROUGH THE STRAIT OF HORMUZ. IRAN HONOURED ITS COMMITMENT TO ALLOW "FRIENDLY" SHIPS TO PAY $2 MILLION IN RENMINBI, ENCRYPTED CURRENCY, SANCTIONED DOLLARS OR OTHER DIPLOMATIC ARRANGEMENTS TO PASS THROUGH THE STRAIT. THE WORST THING ABOUT US FINANCIAL HEGEMONY IS THAT COUNTRIES MUST NOW FIND A WAY TO GET THE RENMINBI. GIVEN THE TRADE DEFICIT OF MOST COUNTRIES VIS-À-VIS CHINA, THE ONLY WAY TO RAISE THE RENMINBI ON A LARGE SCALE IS TO SELL UNITED STATES DOLLAR ASSETS (SUCH AS THE UNITED STATES TREASURY DEBT OR THE UNITED STATES SCIENCE AND TECHNOLOGY UNIT), BUY IN-KIND GOLD, AND THEN SELL GOLD THROUGH THE SHANGHAI OR HONG KONG GOLD MARKETS IN EXCHANGE FOR THE RENMINBI. OF THE TOP 10 ECONOMIES IN GDP, ONLY BRAZIL AND RUSSIA HAVE TRADE SURPLUSES WITH CHINA, THE NINTH AND TENTH LARGEST ECONOMIES. BY CONTRAST, THE UNITED STATES TRADE DEFICIT IS THE LARGEST OF ALL ECONOMIES, FINANCED BY AN EQUALLY LARGE CAPITAL ACCOUNT SURPLUS. HOWEVER, WHEN COUNTRIES SELL DOLLAR ASSETS TO RAISE THE RENMINBI OR MAKE UP FOR COMMODITY SHORTAGES IN SPOT MARKETS AT VERY HIGH PRICES, THE CAPITAL SURPLUS OF THE EMPIRE WILL INEVITABLY DECLINE MATHEMATICALLY. THE FINANCIALIZED UNITED STATES ECONOMY REQUIRES FOREIGN CAPITAL TO FINANCE GOVERNMENT EXPENDITURE; WITHOUT IT, THE BILL WILL NOT PASS. THE PRICE OF THE FINAL BOND FELL OR THE RATE OF RETURN ROSE, AND THE DECLINE IN STOCK PRICES WOULD REQUIRE THE PRINTING OF BANKNOTES TO FINANCE THE GOVERNMENT。

Scenario 2: Star and flag seal

Interestingly, on Sunday, 12 April, following the failure of the United States and Iranian negotiators to reach a permanent ceasefire agreement, Trump announced that the United States Navy would block all vessels entering and leaving the Strait. Perhaps the blockade would turn into a bribe for the bandit baron, and the ship would have to pay a double pass fee to two hooligans in Iran and the United States, and then shout out God almighty and Hallelujah. Or perhaps there is too much ex post facto immunity for one or another of the countries, and the embargo is just a piece of moldy Swiss cheese. That view remains valid, and if possession of the United States dollar does not guarantee that the pirates will not sink your ship, why should it be

Scenario Three: Empire Strikes Back

In this context, the United States Air Force and Navy did what they had to do to destroy the ability of the Islamic Revolutionary Guard Corps to disrupt shipping in the Strait of Hormuz through punitive long-range bombing. The Strait is reopened and any vessel can pass safely without additional costs. The restoration of the hegemony of powerful empires eliminates the need for countries to use any currency other than the United States dollar and does not require competition for expensive goods in spot markets, at least for a few days. The problem is that ending Iran ' s control over the Strait could well mean the total destruction of that country. Or, as Trump said, "Return them to the Stone Age." Many Americans, who have been indoctrinated from their birth to believe that Iran is the most evil country on Earth, hailed this tough stance against the number one enemy. However, destroying Iran in this way means that, at the last breath of Iran, they will honour their commitment to bring other goods and energy production in the Gulf to their grave. The spices will never circulate, and the global central banks will have no choice but to print money to save the global financial system when commodities soar。

If you live in some broken-down country, the local currency will inflate the dollar or the rouble. The United States and Russia will be the only remaining large swing-producing countries that can fill the gap left by a hot ground in the Middle East. There will be famine and widespread social unrest. So, although your bitcoin may be worth an infinity of some piece of paper, if you cannot escape in time, your well-being will be at serious risk。

Before I continue to discuss the performance of bitcoin in each case, let us quickly browse some graphic pornography to provide graphic evidence of my text。

Back to normal

In view of the fact that I have written this in detail in This Is Fine, let me reissue some of the charts and tables provided in that article:

IN SHORT, AI'S PROXY DEFLATION COLLAPSE WAS MORE SEVERE THAN THE 2008 SUBPRIME MORTGAGE CRISIS IN THE UNITED STATES。

The rate of default on consumer credit has risen and the downsizing party has not even really started。

Tehran toll station

In essence, if that were to happen, it would be the end of the oil dollar and the rise of a new global reserve currency or basket of currencies. At present, the Islamic Revolutionary Guard Corps is flexible in terms of payment terms. But if they consolidate their authority over the Straits, why continue to accept the dollar payment, as the United States is doing its utmost to limit their ability to use it? In the end, I'm sure they won't be allowed to pay in dollars. The renminbi and gold are likely to become the two main currencies of sovereign trade。

Why save in dollars if goods cannot be delivered without paying the renminbi? Given the trade deficit of most major economies against China, the only way to raise the renminbi is to sell the dollar, buy gold and then buy the renminbi. From now on, countries must save their trade surpluses as gold, not as United States Treasury bonds or stocks。

In order to highlight the growth in the use of the renminbi in trade, I would like to pay attention to the graphs issued by Luke Gromen, which show that a quasi-RMB-gold system is emerging。

Step 1: Sale of dollar assets (national debt) and purchase of gold

Since the beginning of the war, foreign holdings in the Federal Reserve have declined net by $63 billion. I use this as a directional agent for foreign holdings of national debt and other United States dollar securities such as stocks。

What did the seller do with the dollars

Non-monetary gold has been the largest export commodity of the United States for four of the past five months, an increase of 342 per cent over the same period。

They buy gold in these dollars and transport it out of the United States. That was the case with the American manufacturing renaissance; the only thing leaving the United States was the savage relics. All the supporters of Trump who thought they could get back to work at the high-paying factory said they were sorry. Another United States presidential term led to blue-collar workers being fucked without lubrication。

Step 2: Selling gold for the renminbi

The Swiss refinery receives United States gold and is recast into gold bars suitable for delivery to China。

Step three: payment of travel expenses to Tehran

THE MINISTER OF FINANCE, VICENTE, WAS SERIOUS WHEN HE SAID, "PUT IT IN DOLLARS OR BE SANCTIONED AGAIN". AS A RESULT OF SANCTIONS IMPOSED BY THE UNITED STATES SOME 15 YEARS AGO, IRAN WAS UNABLE TO USE THE SWIFT PAYMENT NETWORK. THE TRANSFER OF THE RENMINBI TO THE IRGC DIRTY HANDS REQUIRES THE USE OF THE CHINESE FRENCH CURRENCY CIPS INFORMATION SYSTEM. AS YOU CAN SEE, THERE HAS BEEN A SIGNIFICANT INCREASE IN TRADE SINCE THE BEGINNING OF THE WAR。

This series shows the flow of money from the sale of United States dollar assets to the purchase of gold, ultimately financing the payment of renminbi in Tehran or other suppliers. It is not important that the United States dollar remains the dominant currency used in trade. As markets are forward-looking, the acceleration of the use of the renminbi in global trade is more important than the low absolute use relative to the dollar. Abandoning dollar assets before consensus on the existence of a new monetary system allows investors to protect their portfolios. The Pounds sterling was technically a global reserve currency until the Bretton Woods Agreement in 1944, but the United States dollar actually replaced the Pounds sterling as a global reserve currency at the beginning of the twentieth century, as the United States economy became the most productive economy in the world. In 2026, the United States had a trade deficit for the most productive economies: China, Japan, Korea, Germany, Taiwan, etc. Most countries have a trade deficit against China. I would like to stress again what the fuck is the point of having a dollar if you have to pay a renminbi to those stone-age turbaners to receive the goods

Star-flag blockade and empire counterattack

WHETHER THE STRAIT IS OPEN OR CLOSED CAN BE JUDGED BY LOOKING AT THE CHART ABOVE, OR BY PRODUCING A SIMILAR VERSION USING A CHART TOOL YOU LIKE. THE TOP PANEL SHOWS WTI FUTURES PRICES FOR MAY AND OCTOBER 2026. I USE WTI BECAUSE THIS BENCHMARK PRICE IS MOST RELEVANT TO AMERICAN GASOLINE CONSUMERS. TRUMP’S DE-ESCALATION WILL TAKE PLACE ONLY IF THE PRICE OF GASOLINE CONTINUES TO RISE UNTIL MID-NOVEMBER. THE BOTTOM PANEL IS THE PRICE DIFFERENCE BETWEEN THE TWO CONTRACTS (EXTENDED MONTHS LESS RECENT MONTHS); THE CURVE IS INVERTED. AS THE PRICE OF OIL IN THE LONG MONTHS HAS NOT RISEN AS HIGH AS IN RECENT MONTHS, THE MARKET BELIEVES THAT THE FLOW OF OIL THROUGH THE STRAITS WILL INCREASE SIGNIFICANTLY. IF THAT WERE TO HAPPEN, THE PRICE DIFFERENTIAL WOULD INCREASE, AS PRICES HAD FALLEN SHARPLY IN RECENT MONTHS. BUT IF THE PRICE DIFFERENTIAL SHRINKS AS A RESULT OF LONG-TERM PRICE INCREASES, THE GLOBAL ECONOMY WILL BE IN TURMOIL. IGNORING THE SALIVA BETWEEN TRUMP AND THE IRANIAN REVOLUTIONARY GUARD, I WOULD LIKE TO FOCUS ON THIS CHART。

Number and price of currencies

After the start of the war, the return on the two-year national debt (White Line) surged far higher than the effective interest rate of the Federal Fund (Gold Line). This suggests that the market believes that the Fed will raise interest rates to counter rising energy inflation。

It is important to form a judgement about this, because I think that we might enter a situation where major central banks, including the Fed, might print money at the same time as interest rates are raised, either directly or through the commercial banking system. As food and energy prices skyrocketed as a result of the war, capable politicians would subsidize the major input costs of the economy. Failure to do so could cause social unrest or famine. But in order to prevent inflation from spilling over into all goods and services, central banks must destroy demand and curb credit-sensitive parts of the economy. Any entity that borrows money to purchase goods and services reduces expenditure if the cost of credit increases。

If the central bank stops, my TT-coin prediction will be straightforward. Bitcoin prices will fall in an environment where people reduce all non-food and energy expenditures. But every country must increase defence spending and hoard important commodities, both its allies and its opponents in the United States-run peace order. Do you want your country to be like Australia, where almost 100% of refined hydrocarbons depend on imports from China? At the beginning of the war, China stopped all exports and Australia ' s reserves were less than a month old. They had to turn to Singapore for help, and I'm sure they paid the sky price for jet fuel; otherwise, all those Australian buns would have to stay in the country indefinitely! I know that some of you will cheer for this result, especially Japanese skiers。

The creation of bombs, especially nuclear bombs, to protect itself from being turned into garbage cans, as well as the accumulation of commodities, require a substantial increase in government borrowing. If domestic private investors are unable or unwilling to purchase these junk government bonds, the central bank and/or commercial banking system will print money to buy them, thereby increasing the supply of French currency。

When reading my projections of the movement of bitcoin in all cases, remember this dynamic. You have to judge whether the amount of money or the price is more important. Otherwise, you will not understand the seemingly contradictory price trends of different risk assets。

Back to normal

BITCOIN IS LIKELY TO MAKE A SMALL REBOUND WHEN THE SITUATION RETURNS TO PRE-WAR STATUS. HOWEVER, THE AI PROXY DEFLATION BOMB IS STILL TICKING UNDER THE SURFACE. BITCOIN WOULD NOT INCREASE SIGNIFICANTLY UNTIL THE FED PROVIDED THE NECESSARY LIQUIDITY TO FILL THE BLACK HOLE CREATED BY CONSUMER CREDIT DEFAULTS ON BANK BALANCE SHEETS. THIS IS NOT TO SAY THAT IT CANNOT SOAR TO $80 TO $90,000, BUT TO ME, INVESTING IN NEW FRENCH CURRENCY REQUIRES THE FED TO SEND A FULL RELEASE SIGNAL. GIVEN THE AMOUNT OF MONEY I'VE DONE, BECAUSE I'M RUNNING A PURE MULTI-HEAD BOOK, IT WOULD BE BETTER FOR ME TO SEE A HIGHER NET VALUE FIGURE ON THE SCREEN, BUT THE RISK RETURN WOULD BE LESS THAN ENOUGH FOR ME TO BET ON AND SHIFT THE PORTFOLIO TO THE HIGHEST LEVEL OF RISK。

I DON'T KNOW HOW LONG IT WILL TAKE FOR THE BANKING SYSTEM TO COLLAPSE. BUT EVERY WEEK I READ THE STORIES OF COMPANIES LIKE THIS OR THAT THAT CUT A LOT OF KNOWLEDGE WORKERS BECAUSE AI AGENTS ARE MORE EFFICIENT THAN ORDINARY PEOPLE, AND OTHER STORIES ABOUT RISING CONSUMER CREDIT DEFAULT RATES。

There's an affair here. I recently talked to an entrepreneur friend who runs a successful encryption game company. He's OG. We started discussing how AI affected his business. As a person trained in computer engineering, during Christmas holiday in 2025, he sat down using the latest Claude model to try to create something. He was so surprised that he had been able to produce the code so quickly that, a few months later, he had gone to the company's field meeting with the best engineers to discuss how AI would affect business. He asked them to create a workflow that allows AI proxy to code all day. They automate all the links, including code reviews, so that every morning when they wake up, available, tested codes await review by senior engineers. One person alone completed his six-month road map in four days, supported by an AI proxy team. Following that meeting, my friend decided that his company must immediately change its workflow. So 50% of his staff will be eliminated in the next few weeks. In the AI proxy age, ordinary engineers are redundant, but using AI agents, the productivity of the top talent will increase 10 to 100 times。

AS THE MODEL ACQUIRES MORE EXPERTISE IN SPECIFIC AREAS, ALL ORDINARY KNOWLEDGE WORKERS ARE AT RISK OF UNEMPLOYMENT. UNFORTUNATELY, DESPITE THE EXISTENCE OF UNEMPLOYMENT INSURANCE, ACCORDING TO BLS AND ST. LOUIS FEDERAL RESERVE DATA, THE HIGHEST MEDIAN ANNUAL UNEMPLOYMENT INSURANCE PAYMENTS IN THE STATES OF THE UNITED STATES ARE APPROXIMATELY $28 MILLION, WHICH DWARFS THE MEDIAN WAGES OF KNOWLEDGE WORKERS OF $85,000 TO $90 MILLION. THERE IS NO ALTERNATIVE TO PAYING BACK CONSUMER CREDITS OWED TO BANKS. THIS IS THE END OF A FALSE RESERVE BANKING SYSTEM。

Bitcoin (gold wire) and U.S. software SaaS ETF IGV

That said, after the ceasefire, United States SaaS software stocks resumed their downward trend, but Bitcoin held positions and rebounded. This is a welcome breakthrough in relevance, but it is too early for me to assert that bitcoin has seen AI deflation of the knowledge workers involved and predicts a significant increase。

Tehran toll station

AS COUNTRIES SELL DOLLAR ASSETS TO RAISE THE RENMINBI TO PAY TOLLS, THE PRICES OF NATIONAL DEBT AND STOCKS WILL FALL. THIS MAY BE A SLOW PROCESS, AS THERE ARE CURRENTLY OTHER PAYMENT OPTIONS THAN THE RENMINBI. HOWEVER, DUE TO THE LEVERAGE EMBEDDED IN THE SYSTEM, THE FALL OF A SMALL SNOWFLAKE COULD TRIGGER A FINANCIAL AVALANCHE, AS MORE SALES WERE GENERATED, VOLATILITY INCREASED AND MARKETS FROZEN. THEN MONEY OFFICIALS HAVE TO INTERVENE IN THE PRINTING OF MONEY. THE KEY INDICATOR FOR CONCERN IS THE MOVE INDEX, WHICH MEASURES THE VOLATILITY OF THE UNITED STATES BOND MARKET. WHEN THE INDEX RISES TO MORE THAN 130, SOME FORM OF PRINTING OCCURS。

As volatility increases and the prices of large United States technology shares fall, it will be difficult for Bitcoin to rebound significantly. As investors reduce portfolio risk due to higher volatility and lower prices, investors sell bitcoin to meet the additional bond requirement. Bitcoin will rise only when the situation is bad enough, as relief is expected to become a consensus。

Waiting for Becent and/or whoever the Fed Chairman is to press the money printer button. The risk payback of trying to rob the situation is less worthwhile. I hope that bitcoin will hold $60 million during any full-scale TradMarket financial crash. If Bitcoin's second test and holds it at this level, I'm generally inclined to increase risk。

Star-flag blockade and empire fight back

The global economy will suffer as the prices of oil futures at the back end rise rapidly, catching up with spot prices or prices in recent months. At some point in time, the destruction of demand would shock the national debt and the prices of United States equities. As before, the initial reaction was a drop in bitcoin. Once the over-leveraged Western financial system collapses, the money-printer is activated. If the blockade eventually ends through punitive bombing operations against Iran, then Iran destroys all energy production in the Persian Gulf, which could lead to the destruction of the Iranian State. The currency-printed bitcoin rebound may be short-lived, as the destruction of the Iranian State has greatly increased the likelihood of World War III。

Portfolio construction

As a non-leveraging, pure multi-head investor, Maelstrom can make time and profits work. It's very encouraging to see bitcoin running in the last few days against IGV. This will inspire me to re-evaluate my attitude towards the price of bitcoin, even though the financial deflation brought about by AI's knowledge work is accelerating. The only assets that I am willing to increase risk at this time are gold and hype (Hyperliquid’s governance token). The HIP-4 will start in a few weeks, and I predict that it will take from Polymarket and Kalshi a substantial share of the projected market vertically。

Beyond that, I will pray daily to Chinese to infect the minds of our global political elite and convince them to take LSD instead of dropping bombs。