Unchained - Why Arthur Hayes Thinks the AI Bubble Bursting Could Spark a Crypto Bull Market

Episode Date: May 12, 2026

Arthur Hayes sees one force driving markets right now: governments printing money to finance AI and war. He explains why that ends with Bitcoin much higher — and what could derail it. ======================================================== Thank you to our sponsor! ⁠Coinbase One⁠: Get 20% off the first year of your Coinbase One annual plan at ⁠coinbase.com/unchained⁠. ======================================================== Maelstrom CIO Arthur Hayes called the Tehran toll booth scenario in writing — and now it's playing out. Sovereign nations are waking up to the fact that dollar assets don't buy oil when the strait is closed.  On this episode, Hayes joins Laura Shin to explain why the structural unwinding of petrodollar recycling forces the Fed to print, why an AI deflationary bust could rival 2008 in severity before central banks step in, and why that path ends with Bitcoin substantially higher.  He also breaks down his current highest-conviction positions: Hyperliquid, Zcash, and NEAR, and explains why he's deploying into what he calls maximum disillusionment in private crypto equity. Host: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Laura Shin⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, Host / Unchained Guests: Arthur Hayes — CIO, Maelstrom Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, everyone. Welcome to Unchained. You're no hype resource for all things crypto. I'm your host, Laura Shin. Thanks for joining this live stream. Today's guest is Arthur Hayes, CIO of Mailstrom. Welcome, Arthur. Hi, thanks for having me again. Yeah, excited to chat. So we've had you so many times on the show. And I would say if I were to just condense your thesis for Bitcoin and crypto down to one thing, it usually involves money printing. And I'm sure you're very where that Trump is saying that, you know, the ceasefire in Iran is on life support. You know, we're seeing this prospect of potentially like some kind of energy crisis looming. And your recent crypto-haze substack piece starts with you anticipating what you describe as the incipient bull market. I'd love to hear why do you think that a bull market is around the corner? So I think at the end of the day, wars are inflationary, especially the U.S. around war is no different. And what's happening in terms of AI and defense and commodity stockpiling, I think points to

inflation around the world and pretty much any fiat currency you can imagine, especially in the United States. And if you take a look at what Trump has done, whether you agree with it or not, you know, if you think about the themes that are going to continue past whatever happens with the how this war ends or, you know, continues into perpetuity, is, you know, you know, Nations are going to spend on AI and drones. Nations are going to spend on redefining their supply lines, whether that's building pipelines, sourcing goods from other countries, stoppiling commodities.

And these two things together lead to an inflationary environment, and the central banks and the commercial banks are going to step up to the plate and create the credit needed to make sure that this happens, at least in developed markets or very well. wealthy sort of non-nevalage market. So unfortunately, if you're in Bangladesh, you're fucked. If you're in Philippines, you're fucked. People might starve.

People might die. But at the end of the day, most people don't give a fuck. So markets don't care because they don't really buy anything anyways. So that's the unfortunate part of the situation. So I think people, when people get hung up on, oh, yes, there's this really bad thing because all this fertilizer is not getting through this J-O-4 moves. And there's going to be this food crisis and rebellion. It's like, well, rebellion in all the places that you don't care about.

Like, when's the last time that you're you. you thought about Burkini Faso or what's happening in Dhaka and Bangladesh. Like most people have no idea of probably going to locate these places on a map, yet they're worried about this sort of situation that's unfolding because some commodities aren't going to get to this trade. The Europeans, the Americans, the wealthy Asians, they're going to get their shit. Yeah, it's a very, it's probably accurate, but it's a very sobering and slightly dystopian.

But so, you know, one other thing that I saw in your piece was you talked about how you felt like the war will recalibrate the allegiance or difference that different countries have to the U.S. You know, you talked about like Europe, Asia, Australia, may, you know, because of the fact that their populations are going to suffer more than we will in the U.S., that that would then lead to kind of a change. in their relationship to the U.S. and also to dollar assets. So explain how you think that will happen. So I think let's go back to the Asian financial crisis in sort of the late 90s. And essentially you had this situation where a lot of these Asian countries like Thailand, Malaysia, Indonesia, they ran out of dollars because they borrowed all this money. They couldn't service the debt and dollars.

And then all of a sudden, they have a balance of payments crisis. You know, the situation resolved ultimately the Fed printed money and made sure that it got to the banks to sort of roll over some of the worst loans and they muggle through. But the lesson for a sovereign reserve manager was, I need to have dollars ready because if something happens, I need to be able to buy medicine and oil and different things and defend my currency. So if I have any savings from an export-oriented economy, which most of Southeast and North Asia is, then I save those in dollars. What does that mean?

I have large U.S. Treasury balances, large investments in equities. and the corporates followed suit, right? There's no investment opportunities at home. It's an export-oriented economy. The people in the country can't really afford to buy your goods, but everyone can afford to buy them in America and Europe. And so, therefore, you save in dollar assets, treasuries and equities.

And you believe that you're safe because of the last crisis, which was caused by a shortage of dollars. Therefore, if I have a lot of dollars, I'm safe. And so you didn't really think about the physical world that we live in, right? that a lot of your commodities first come from, you know, the Middle East, then they transit through what a three kilometer, three mile long waterway that's controlled by Singapore, Indonesian, and Malaysia, the Strait of O'Laka, and then they get to, you know, the destination.

And this Iran war is making people realize the physical constraints to trade. If for whatever reason, Iran can close the street or severely curtail the flow of goods and the United States who hold all their assets because you believe, that they would be able to do something about it. And whatever we, like, seven or eight weeks into the war. And regardless of what Trump says about the strapping open, it's not open and the volumes needed to supply the rest of the world with the commodities that they need it.

An example would be Australia. Australia implores pretty much 100% of its refined hydrocarbons from China. Why? Because it's a little bit cheaper. And they don't believe there's any sort of reason why you would build your own refineries. And so then when China says, hey, we need to make sure that our people have enough fuel. We're not exporting anymore. This was at the start of the war. They put this, I think January they stopped exporting certain refined hydrocarpans. Australia finds themselves with no jet fuel. And then no foreign airlines were to land in Australia because they don't know if they're going to

have enough fuel to make the return flight. And so all of a sudden, you have this country at the ass end of the world, depending on China for their 100% of the refined oil products, the prime minister, minister, they literally got on a flight to Singapore and begged the prime minister of Sanford, pay whatever other costs to get jet fuel so that his population wasn't stranded. And great, what is your treasury bond and your equity is worth when you can't have a commercial flight so that your people can come and go as they please? And so I think sovereign nations are waking up to the fact that, great, I have a lot of dollars, but they don't buy me anything.

So why do I have these dollars? Maybe I should have built my own refinery. Maybe I should have built another pipeline out to export my hydrocarbons out of the Persian Gulf if I'm the UIE or some other countries in the Gulf. Maybe I should have stockpiled more than 30 days worth of food or hydrocarbons and spent that money on that rather than holding this piece of paper guaranteed by the mighty of U.S. government. And so I think this is a secular trend where people are going to wake up and realize this is the problem that I face based on this crisis.

How do I solve it? Well, I either don't save in dollars. I save another currency like gold. and I make sure that I have enough of the inputs of civilization so that if there's another sort of war or conflict, I'm not begging around the world or in certain cases my people are starving. And so that I think diminishes on a structural secular basis

this demand for treasuries. And so people want to recalibrate how they save at the sovereign level, which is very bad for the United States because the massive trade balance is financed with a massive capital account surplus. And this capital account surplus is this phenomenon of sovereign nations recycling their savings into dollar assets to protect their currencies and to be able to buy dollar things in the global markets. And so then play that out a little bit further.

So then what the reserve assets in Yuan go up. And then how does that affect the markets? Or does that just lead to more money printing? Well, at the end of the day, it means that if I hold the trip, treasury bond and I need to, instead of holding treasuries, I need to hold more oil and wheat and building infrastructure. Then, number one, I'm not going to buy as much or any U.S. treasuries with my, you know, export surpluses. And number two, I have to sell down these assets to build these physical things or stockpile these physical commodities. And if foreigners

are, were this inelastic bid for assets and now are disappearing, you have a problem in the U.S. markets. And the U.S. markets are, they need this foreign bid of assets. to have these lofty prices, these lofty prices, give people capital gains taxes. This funds the government. And so without this capital flowing into the United States, there's an issue with how the government funds itself. Interest rates go up. The cost of debt goes up. Equity prices go down.

People feel less wealthy. They spend less. And so this really affects the U.S. economy. And so my thesis is that Besson and whoever is the chairman of the Fed will print enough money to make sure that in this foreign selling on a sector of basis that does not impact up only for U.S. asset markets. Okay. And then one other quick question on this. Do you think the trend in stable coins could outweigh that at all?

Or is that just too small right now? Or what are your thoughts about that? Obviously, I published some very massively bullish piece on, you know, long-term stable coins generating all, all these dollars. I don't know what the stable corn growth has been over the last, you know, year. I don't think it's been that impressive in terms of the expectations. And so I guess we'll see. I'm not really sure that the stable coin thing really moves the needle in terms of these secular flows that have driven sort of the primacy of U.S. asset markets from Asian financial crisis to the present moment.

All right. So in a moment, we're going to talk a little bit more about how the Iran war is affecting markets. But first, we're going to take a quick word from the sponsors who make this show possible. Who in the group chat has the absolute worst. sports takes? You guys, it's got to be me. I don't even watch sports unless it's a global event. But Coinbase is giving me a chance to out-predict a pro basketball coach for a share of 5 Bitcoin. And honestly, I'm built for this. I have beginners' luck, energy, and absolutely nothing to lose. Coinbase is bringing in pro basketball coach Lethal Shooter to see if you can

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and Cardless Inc. Cards issued by First Electronic Bank. Bitcoin back rates are based on cardholder's assets on Coinbase. Back to on conversation with Arthur. So you also ran another essay, No Trade Zone, in which you saw a few potential scenarios for what would happen with the war. And it's so interesting because it looks like one of your scenarios is sort of playing out. You called it the Tehran toll booth. And, you know, right now it's that situation like Iran is allowing friendly ships to transit through the street. It's taking payment. in Chinese yuan, crypto. I think even some foreign central banks are starting to sell treasuries to source yuan.

And you said, essentially, quote, if this scenario occurs, it is the end of the petra dollar and the rise of the new global reserve currency or a basket of them. And you kind of like showed how this was starting to happen. So, you know, it's interesting to me because like we're also seeing that even neocons like Robert Kagan and the Atlantic was saying that the U.S. has suffered a total defeat. So I wondered if you could just talk a little bit more about, like, how you see all of these trends playing out in the long term in terms of the geopolitical balance. So I think, obviously, there's, you know, many in the U.S. political elite who believe that the

United States, whether it's for religious reasons or whatever, deserves to be the global superpower, is the empire, is the best. for all these, you know, certain reasons, whatever they believe. And that, you know, this war is sort of damaging that sort of prestige. And the response to that is destroy Iran, right? Bomb them until they're, you know, back to the Stone Age, as Trump said in one particular tweet a few weeks ago. And then on the other hand, you have people who are a little bit more like, okay,

well, empire is very expensive to run, right? this whole U.S. hegemonic infrastructure is expensive. That's why the U.S. has, you know, the ridiculously high trade deficit with a capital surplus, you know, the middle class is how allowed, it doesn't produce anything, it just exports finance because that's how the empire, that's the software that the empire runs on. And they say, well, that's not a great deal for Americans. Maybe we can allow China or some other nations to sort of, you know, hold the baton with us and it becomes cheaper, right? And so there's this battle in the, elite mesolithic circles as to which one. And so do you see Trump sort of vacillating between,

okay, let's, you know, nuclear bomb, or he's, has he's threatened, or let's, you know, try to come to some sort of deal. And again, I don't know which one of those will actually occur, but it seems that the muddle through, enough gets through so that things don't completely blow up is the situation that we're currently in. The ceasefire is on again, off again. Who knows, that's really going on. But obviously, some ships are getting through. Some oil and hydrocarbons and fertilizer is getting through. Obviously, it's those who can pay the most is getting it.

But again, the world isn't ending because of the Iran War. And let's call it one or two years. Hence, or post this, there will be more pipelines. There will be redundant supply change. And this card that Iran can play now will no longer be playable because everyone else will diversify the way in which they move goods. That's including China, right? the people say, oh, China is Iran's best friend. China imports more cruel up from Saudi Arabia than Iran.

So to some extent, they're like, okay, well, if the U.S. wants to spend billions of dollars and waste over ammunition against Iran, cool, we've been stock planning this stuff for a long time. We'll just sit in the background and see what happens. So I think we're going to see what happens for the situation. For most people in the world, things are going to get more expensive, but you're still going to eat. Obviously, there's going to be a lot of people living in the world who are not going to eat, and that's going to be very tragic. But again, no one cares. Yeah, I mean, it's sad, but it is a fact. Okay, so one other part of the piece that you talked about, or that I wanted to talk about was you said that you were looking at the West Texas Intermediate WTI futures prices as a signal of what was going to happen in the global economy.

And you said one possible outcome would result in all hell breaking loose. Explain like why you're watching those futures in particular and how, you know, the, the trend or one of the trends in those prices could pretend this all hell breaking loose in the global economy? Yeah. So obviously Trump and those who support them in the Republican Party, they have an election coming up. And the U.S. voter is very sensitive to gas seed prices because the U.S. economy is built on people driving places and spending lots of money on gas. And so the metric to look at for what's going to be the biggest indicator of what a price, the gallon of gas thing is going to cost is the WTI metric. And there's so many different crude metrics depending on the type of crude

where it's located all these sorts of things. But again, Trump is very concerned about domestic politics, especially the election that's coming up in November. And so if you see WTI of all the measures, you know, ripping higher, that's going to be concerned for him and his Republican backers. If you see

the back end futures, like, you know, six months out rising, basically saying, okay, well, this is going to last a long time. I should demand more for my barrel of crude in six or 12 or 18 months. That's also very bad. That basically means that the market is saying, okay, well, this thing is going to last to a certain length of time, and it's going to get worse and worse and worse. And so the spread

between those is what I look at. I pull this up this chart every morning. And I say, okay, well, I don't care what Trump said. I don't care if the IRGC said in Iran, let me see what the oil market says in the only thing that really matters to Trump. He doesn't care if the Europeans freeze the death of a winner. But if the median voter in a battleground state is paying $7 for gasoline and that means they're going to vote for the Democrat, that's when Trump cares. Okay. Yeah. Yeah.

We'll have to see what happens with that. You know, one other thing that I saw is in the, I think it's two essays ago, you said that you considered Q1 a no trade zone. Why did you think that? And now what's your position for Q2? So in Q1, I was very worried about AI deflation. And, you know, as we've seen, starting with the tech companies, people are laying off there. least productive workers and replacing them with AI tools.

And my whole thesis was, and this is not my original thought, there's been lots of macro analysts who pointed this out, is that 10 to 20% of the workforce getting let go because of efficiencies in AI means that these high-consuming individuals no longer conservates their debts and no longer are buying stuff that runs the American economy. The American economy is very leveraged to the consumer and to consumer debt. So if you take out those earning $100,000, $200,000 a year because, you know, their bottom 20th percentile, company says, okay, well, the AI is better.

I'm just going to fire you. Which we've seen, you know, 10 to 50 percent reductions in label force at a lot of these large tech companies that are the leading adopters of AI, then you say, okay, well, this is happening. At some point, you know, the banks are going to have a credit issue because they're holding these loans on their book at 100 and maybe they're worth zero because all these people. can't serve with their debts. And the software, ETIF, IGV, US sold off aggressively from October until probably when the war started. Bitcoin followed suit. The NASDAQ was pretty flat over the same period. So this to me said that Bitcoin is saying that there is not a left liquidity being created.

Central banks seem to believe that AI is a productivity miracle. Therefore, they don't need to print any money. But Bitcoin is saying something else. Well, there's not enough credit being created. there's a deflationary event. So, okay, well, I know eventually there'll be a crisis and they'll print enough money to make me good. But why would I be adding risk at this particular point in time in my portfolio? And so that's why we basically did nothing for the first, you know, call it three months,

for first quarter of this year. Okay. And so now we're in Q2. And also we're in a stage where it looks like Kevin Warsh will be confirmed as the next Fed chair. So I was curious for your thoughts on. how his tenure will affect the crypto markets. So I think people place a lot too much emphasis on who the Fed cheer is. He faces very constrained options, right?

So all the talk is, Warsh has been blasting the Fed because the Fed has too large of a balance sheet. And this has been the talk in the central banking community of what does the Fed do with the composition and the size of its balance sheet. And Stephen Moran, another figure. governor published a paper, basically a menu option of how to reduce the balance sheet. And he's been very prescient in terms of his policy papers, and they are read and they are acted upon by those in that community. If you read through the paper, which I suggest anyone who's serious about making money does, then you see that all of his ideas are around

changing regulations so that banks want to buy more treasury. want to conduct more repurchase operations, and the Fed can say, okay, well, if the banks are doing it, we don't have to do it. And so it's, you know, Robbie Peebiter to PayPal. It's, okay, yes, the Fed balance, she technically is declining, but it's being replaced one for one by the banks increasing their holdings of U.S. Treasury. So the net effect on liquidity is zero. So Kenne & Washington get up there and sound like he's this, you know,

hard money advocate, Fed Independence, yada, yada, yada, when in effect in the dollar markets, it doesn't mean anything because it's not as if the Fed is actually going to go out there and start selling bonds and say, okay, well, we need to reduce our balance sheet by $2 trillion. Okay, well, then don't sell $2 trillion. They're your bonds. You can do that. Right. So I think that is the policy option that nobody is talking about. Everyone's talking about regulatory changes that make the banks want to do the Fed's job for it.

And so that's why I say he's a neutral sort of variable in this sort of monetary equation. But let's focus on the wartime economy and AI. How is that going to be financed? Let's focus on the impetus for commercial banks, both the United States and China, to do the bidding of the government to finance AI to finance war. Okay, yeah, I definitely want to ask you a bit more about the AI piece, since that's what you wrote about. But before we do, I just have a couple more questions about the war.

You've lived in Asia now for a very long time. I was so curious to hear, like, if you knew kind of how, how people in Asia perceive the Iran War and the global geopolitical balance. And then therefore, you know, because especially in the crypto markets, I know the Asian traders have a big effect on things and how all that might translate to some kind of effect on the crypto markets. Yeah. So on sort of a qualitative, squishy, feely basis,

I had a friend who was at the Hong Kong 7th. It's a rugby tournament. it happens in March, March or April every year. It's a big event for Hong Kong. And I think it was a semi-final, quarter-final game. And, you know, the women's team, no, not the women. The men's team was out there on the pitch and the entire stadium was booing them. Right.

And so I think the sentiment around Asia is, you know, the United States fucked all this shit up for, we don't know why. And we're all going to suffer, right? because it's not like, again, Americans are going to starve or Americans aren't going to have enough oil. But my made in the Philippines family, they're starving. The builder that I know is building my condo in Bangladesh, they're starving, right? We're having to work from home. We're having to get messages from the government about rationing energy, right? All because America decided that for whatever reason they needed a bomb this country, we don't understand why.

And so, fuck America. Now, obviously, it's not violent or anything like that, but that's the, feeling out here in Asia in terms of this war, if you want to have a sort of opinion. I don't think that really matters much for crypto traders because, again, it's a liquidity play at the end of the day. Okay. Okay. And so this is like a segue to the AI question, but again, it's Asia focused.

I was also curious how people in Asia perceived the competition between the U.S. and China over AI. I really haven't asked anyone directly about that, but I guess at the end of the United States, of the day, everyone's benefiting. So if you're in Korea or Japan, right, Samsung has been on the tear. I think the earnings were up. Some ungodly number in terms of their last quarterly earnings. The Kaspi has been going bananas, the NICAs up.

Taiwan names are getting, you know, bid up aggressively. So it's like, great. Okay, well, China's going to spend on AI. America's going to spend on AI. The central banks are both printing money. The commercial banks are both printing money. This is great. People are just going to keep buying our ship, right?

So Asia's loving this competition, right? Because at the end of the day, you have to buy things from Taiwan, Korea, and Japan. You have to buy raw minerals in Indonesia. You have to ship things through the Strait of Malacca, right? So everybody wins in this sort of orgy of money printing and financing of this AI war. Whether or not it's worthwhile, you know, 10 years time, we'll find out. But again, people are making a lot of money on those rivalry. Yeah, yeah.

I don't normally see news about the Korean markets on my timeline, but just some of, yeah, the market happenings there are making their way to me. So yeah, so it's kind of funny because here you are talking about how there is this frenzy and people are making money. But in your latest piece, you talked about seeing two catalysts that could lead to this moment of disillusion with AI. And like you seem to think it's kind of right around the corner. So talk about your thesis there.

So again, we're in this. There's an excellent paper written by two folks from China University of Hong Kong and University of Macau based on this model phenomenon of the game theory behind CAPEX spending in AI. And the authors call it the Red Queen effect, where they basically make a distinction between ordinary CAPEX, where you build a factory and regardless of if your competitor comes up with a competing product, your factory still has use. It doesn't become obsolete immediately. But in AI, the best model wins and is the best model. If you spend all this CAPEX and your model is not as good,

then nobody uses your model. It's like, it's like anthropic versus open AI. Clod is marginally better. Everybody uses Claude, right? And so they stop using Open AI. So the hundreds of billions allows you spend on CAPX is worthless. So what do you do? Well, you constantly need to be spending money to create the front-term model. Otherwise, your entire KAPX set is where it's zero. And this generates this perpetual motion of spending. And we're seeing this now in earnings for a lot of companies, which is why you're seeing this sort of like vertical ascension and price for a lot of the inputs to AI data centers and chips and other things in the U.S. and North Asian markets because people are realizing, yes, okay, if the model is good enough, people are going to use it.

Thropics revenue has gone up like something like 10x or something crazy in the last less than one year basically because Claude is just good at doing stuff. And so there is a demand for compute and these hyper-scales have to keep spending this money. Now, obviously, this can't go on forever. There's no such thing as sort of an infinite perpetual motion machine in this universe. And so some others have come up with this idea like, okay, well, what usually ends a frenzy? There's some sort of IPO or some sort of mega merger that's just so big and so ludicrous in terms of the underpinning financial assumptions that the market just can't adjust it. And so like, you know, the stock list at 100 and the next day it's already down at 50.

I'm like, oh, fuck. You know, if people aren't buying into this IPO and it's just sell only, this has to be the top of the market. And so I think there's going to be a situation like that. I don't know when it's going to occur, but it's going to be pretty obvious at the time. This mega merger, this mega IPO, it debuts and it just completely flops. And it's that point, people are going to start asking questions. Oh, is the trillions of dollars we've spent on all this CAPEX really worth it? Have we generated enough use cases for this? Or will we generate enough use cases in the immediate future? Why do I own this company at, you know, one million times earnings if the category leader gets IPO and the stock's down 20% when it should be, you know,

multiples higher on the first day after listing? So I think these psychological qualitative things feed into the let's ask some questions about all this money that we've spent. And oh, fuck, guess what? I don't really think that I spent the right, you know, this money was well spent, so maybe I should start selling down my holding as well. And that's the end of this market, as bull market, bubble, whatever you want to call. And the second is politics. At the end of the day, most people around the world, especially in the United States, don't earn a lot of stocks. Yes, you know, people are making lots of money, hand over fist, buying some random memory company, and that's up 40% pre-market because everyone discovered it overnight. But the majority of America

I don't own a lot of stocks, but their electricity prices are going up. The price of laborers going up to build these data centers, the price of raw material inputs into electrification and the construction of data centers is making their life more expensive and they get nothing back for it. And guess what? They're worried about losing their job at the same point. And so I think there's going to be a political backlash that's going to hand the opposition party, you know, the team blue Democrats, a sort of a narrative on a plate, which is we're

at TAI, we're for the worker, we're for humanity. be like there's so much good rhetoric that you can put around this that sort of catalyzes the fear that people are feeling and the inflation that they experience on a day-to-day basis. If they vote for me, I'm going to take us back to pre-AI or I'm going to do responsible AI. Whatever the fuck that means, it doesn't matter. It's just going to be a political slogan. And it's going to be up to the team Republicans to come up with a counter of, okay, well, everyone's making so much money, no one gives a fuck.

But again, 90% of Americans in the United States don't own a lot of stocks. So I think, again, it's going to make for a very interesting in 2020 presidential election. And again, whoever wins, it doesn't matter. The reddicker is going to be very good from the opposition because it's true to some extent. And therefore, the investors be like, well, okay, well, you know, 55, 45, whatever you handicap the odds of which side winning,

you still have to de-risk your portfolio because there's a significant pretty much 50-50 chance that the team with Democrats take control. and all of a sudden this rhetoric could become policy. Oh, and all of a sudden, all this money that you spent these ridiculous valuations is no longer worth anything because they're going to tax you. There's a tax proposal put out by some leader in Korea overnight

caused a cost fee to fall 5%. So investors are very concerned that the, you know, 95% of the population is not benefiting at all from AI yet is going to be like, fuck this, tax these motherfuckers, give me my shit back. Okay, yeah. So one other thing that you talked about was, so you called this an AI agenetic deflationary bust, and you said it could rival the severity of the 2008 subprime mortgage crisis. You basically said, I mean, yeah, that mediocre knowledge workers are at risk of losing their jobs,

and that you thought that they would fall behind on consumer credit payments to banks. And then you said, quote, it's game over for the 50s. Fugazi Fiat fractalized banking system. I would love to hear you expound on those comments. So at the end of the day, you know, you create credit to do stuff, right, to the perpetual motion of the economy. Like a recession is when GDP falls, it doesn't ever fall that much. But if the pace of the economy flows, you can't service your debts.

And so if the pace of the economy falls in the short term, and I, you know, I agree that in the long term, A.A. is going to be this awesome. productivity tool. Hopefully, we as humanity, use it wisely and create an awesome economic and life experience for everyone around the world. But we are all humans. We are selfish. We don't share. And in the short term, there's going to be some pain. It's not as if there's immediately a job in some sort of AI field for the dollar worker who just lost their job at Coinbase. Right. There isn't. And so that person who was making a few hundred thousand dollars a year is now, at least in the United States, on unemployment insurance, where I think usually lasts about 26 to 27 weeks.

usually caps out around annualized $40,000 U.S. dollars the year, depending on your state. So you take somebody who was making $150,000, $200,000, now they're making $40. Okay, they have to make a lot of adjustments. They're not buying the sweet cream salad. They're not buying the moco-loca fucking Frappuccino from Starbucks for $10, right? They can't make their car payment. They have to downsize their dwelling. Maybe they're missing credit card payments.

And all these debts are assets on the banking balance sheet. And so the banks have a growing hole of a balance sheet due to the productivity gains of AI not being passed on fast enough to ordinary workers. And so that is the, it's a timing mismatch. I'm not saying that AI is not going to create this utopia of abundance in, you know, medium to long term. All I'm saying is right now the way that we have set up our economy globally, and this is not just United States, every economy around the world. It's fractional financial services sector that sort of needs a constant. growing GDP activity, well, this AI knowledge, intelligence boom goes completely against that and will destroy the financial system unless they print enough money. And so I believe that

they're always going to print enough money. And that's sort of, you know, my investment thesis for my entire portfolio. Okay. And so you made that distinction between how AI will affect the economy and the short term and the long term. So explain the long term part. Like, you know, you kind of hinted, it could be more positive in utopian. So explain kind of what your vision is for how AI will affect the economy in the long term. So, you know, if you think Elon and you believe everything he says, right, so we're going to have robots, right? And the cost of labor is going to go to essentially almost zero, right? The cost of intelligence of doing things is going to move to very, very little as well.

And so we're going to automate all these things, right? your babysitter as a robot, you know, you're not using a lawyer and accountant to do random stuff, right? So anything that we do can be automated and done in an intelligent fashion as that leaves us as humanity free to pursue, you know, hanging out, doing arts and crafts, playing sports, whatever it is, right? Whatever it is that makes you happy, apart from doing your bullshit job at some like, you know, company that looks like the office, the television series. So we're going to remove all that nonsense. and just focus on, you know, communing with each other and producing things that are fun to consume.

Again, that's the utopian future. And how do you get there? You probably have to have some sort of taxation mechanism on whatever the entities that control this intelligence or these robots. Again, I don't know what that situation is, but we're going to have to have a conversation about that. Otherwise, we're going to have such hyper inequality that it's going to cause, you know, potentially, a very, very big social stride. Yeah, yeah. I am hopeful that it just, like, I feel like the days of working for a big corporation

in a soul-sucking way or maybe not completely over, but like it's going to be a lot less of that. So I think people, it'll enable people to be more entrepreneurial, which I think would be a positive thing. All right. So I did also want to ask, because there are certain investments for. right now that are just making a lot of headlines due to all this AI activity. So semiconductors are going gangbusters.

In the last 24 hours now, a video from KOTU has gone viral for its theory that the bottleneck and AI is moving from compute to memory due to this transition to AI being more agentic. How are you thinking about these different trends in terms of investment? So I am not an AI investor. I think we have enough capital where I don't have to be able to. my screens all day trying to figure out the next thing. I'll be on the tennis court or skiing or whatever. So how do I approach AI? I have, you know, some of my homies who are in the

trenches just like slinging stocks all day. I literally, the post of stock that they bought, I guess buy it. I don't even, I don't research it. I look at it. I read a lot of AI research. I love Citrini. They're a great research outfit. They publish long-form articles. They've got different stocks they like, just buy them all. Don't care. Most of them go up. It's a bubble at the end of day, right? It's blatant speculation on a future that we all believe in is going to be so glorious and so ridiculous and therefore anything, whatever the hot new thing is, goes up 100% in a few days. That's how I'm approaching AI. I'm literally just slinging stocks. No research. I'm not, you know, maybe I'll plug a stock into perplexity to find what this company actually does. If it sounds,

you know, semi-legit, okay, just buy it, right? Investigate later. And are you- Are you worried at all about like Michael Burry saying this is, such a big bubble and all that? I agree with them. That's the thing. I know what I'm doing is irresponsible. And I hope that this knowledge of the fact that I'm doing

something patently stupid gives me the forethought or the presence of mine that when this situation where something gets too ridiculous, say, okay, it's time I get off the train and sell everything and just sit on the sidelines. But as Chuck Prince

said, if the music plan, I got to dance. Yes, and we know you love to dance. All right, let's talk more about crypto stuff. So obviously, you're big on hype. And today, a new hype ETF launch. I think it's actually the first hype ETF. Tell us about your hype thesis.

So the hype thesis is very simple. Hyperliquid is not the first decentralized exchange that has tried to do permissionless perpetual trading. The first big one was DUIDX, and that, you know, for 2021 or 2022, performed very, very well. Then the baton got passed to GMX that did very well in 2023. And then Jeff and his team on HyperLycuit, I think had a perfect tokenomics model with a great execution on building this decentralized exchange, right? What they've built, it's very, very good tech, but again, it's not nothing novel in terms

of the product suite or what they're doing, but they really got the tokenomics. right. No massive VC pre-sale, which creates this overhang, which means your token is just going to dump once it unlocks, a massive error drop to traders. And then the most important thing, which so many projects just don't refuse to do, I don't give a fuck what the reason is why you don't do it. You just must do it. If you make money, you must give it back to us as a token holders, whether that's take the emissions or buy back and burn. And for hyperliquids perspective, 97% of revenue, they take it and they buy back the hype token. So, So us as token holders directly benefit if they execute on this vision of permissionless trading.

And that sort of is what took hype from what? I think it listed around $3 to $60 in the first respect. Obviously, I came out with a piece saying I was bearish on hype because of the competition, the low fees. And so we saw what happened. And also the massive unlocks for the team. So on the team unlocks, number one, Jeff and the team are very responsible. They said, okay, let's play for the long term.

we are allowed to sort of unlock a hundred, but we're only going to unlock, we're only going to sell one. And so if you look over time versus what they are allowed to sell what they've actually gotten on chain versus what has actually been sold, it's something like 1 to 3% of the amount. I haven't looked at the April numbers yet. And then most importantly,

they have the most real volume. And I look at that as average daily trading value over open interest. The lower that ratio, the more organic the volume, because open interest grows and somebody puts up real capital to put a position. If you just watch trading for either, you know, volumizing or some sort of liquidity rewards, then you're not really growing open interest. You'll have a massive ADV to OI ratio, which is what most of their competitors sport. And that's why I think I can't tell you if their volume's all real, but I can't tell you it's the realest of all of its competitors.

And they've survived the low fee sort of competition. So obviously lighter and Aster and some of the edge. X and some of these other perp exchange is sponsored by a leading sex came out and said, okay, great. Hyperliquid has created this great narrative on PerpX's. We're going to launch one two and the fee is zero. Here's some tokens. You know, let's try to take some market share in the traditional fashion.

And, you know, it worked for a bit, but after the incentives went away or the willingness to volumize and fake volume declined, then, you know, hype shown through as this amazingly robust and organic venue for real price discovery. And then I think we're really cement hyperliquid in terms of getting this vision right of allowing anyone, anywhere to trade anything, is that during these volatile moments of the war, right, where U.S. President Trump likes to do stuff on a Friday night after the market's closed, where he no longer has a market signal which can sort of influence how he acts. But now we have hyperliquid. And the price of oil is trading over the weekend. Yes, you can't deliver any of this, but it's

indication of what's going to happen on Monday morning. The SEP 500, the NASF, the largest equity indices, have a perpetual trading over the weekends with leverage. Anyone with an internet connection can now express a view based on what has happened. And so now we have more price discovery, and that's where hyperliquid is bringing. And obviously, these markets are much bigger than crypto. And so now you change the trading behavior of the 7-something billion people in the world who do not trade in large Western financial markets for a variety of reasons.

and now they get a little hyperliquid, man, the sky is the limit in terms of how much money they can make from fees as an exchange, as the most important price discovery venue in the world because the most amount of retail traders can actually trade there. And that's why I love hype because it's executing on this vision that started many, many years ago with most of us in the sex game and sort of migrated to Jeff, who's got the best sort of iteration and expression of this idea of how trading should happen in free markets. Oh, that's interesting that you said the best because I was wondering, you know, since you are the father of the perpetual swap, I wondered like if you had kind of any reflections on seeing your baby become the basis for, you know, what has been the breakout decks and crypto and is really kind of succeeded beyond all measure, you know, obviously even recently surpassing Coinbase and notional trading volume. And I just wondered, you know, like for you to see that what your creation can form the basis for this really successful decentralized product, I wonder just have you had any reflections on that. Oh, I'm super proud. I love it. I think it's great that someone has taken this financial product that we created at Bitbacks and is hopefully going to render, you know, large traffic exchange is obsolete. Why should anyone trade on these things?

Yeah, sure. Okay, if you're Citadel or Virtue or Jane Street, you know, large banks, yeah, go have fun on CME and all these in UREs and these type of exchanges. But for everyone else in the world who basically has been locked out of the financial system or given very little visibility into financial markets and always is served dog-ship products, here's a way for you to express a view, long or short, based on what's happening in the world and an open marketplace, yes, it's obviously not perfect. But again, here's an opportunity for you to participate. We otherwise would not have been able to. And I think it's great that hyperliquid exists. And I hope they continue to move from strength to strength. And obviously,

as a large token holder, I hope they make money on that too. Yeah. Yeah. All right. I want to ask you about another big crypto trend that you're very interested in right now, which is privacy. and you have a particular horse in the race. You talk about Zcash as the bet to make there. Why have you selected Zcash as the main privacy coin? So I think that the cryptography behind Zcash is the most secure in terms of if you want to keep your transactions private. Now, obviously, there's a big debate on Zcash versus Minero versus the other privacy coins. And I think Zcash is the best.

I'm not a cryptographer, so I can't sort of give a super intelligent explanation as to like why Zcash nerve-bred a lot of things from different folks, good and bad. I've talked to a lot of folks who are in the trenches on developing these things. And I believe that Zcash is the best option. But at the end of the day, I think privacy is important. And whether you believe in Zcash or something else, I think every crypto investor needs to have some of this in our portfolio because it's going to be very highly valued, especially in a situation where Bitcoin is pseudonymous,

and I don't think Bitcoin should add full privacy to it. I think there's some obviously good things about having a public blockchain in terms of transparency and accountability. But with AI, big tech and big government, it's very trivial to de-anonymize transactions. And people want that privacy, and there will be a private alternative. I just happen to think it's Zcash.

And the relative value of Zcash and Manero 2 Bitcoin at this point very, very low. very asymmetric that as people sort of recognize the power of these technologies, because we're humans, we're stupid. We think of linear terms. We don't think about exponentially smarter an AI is than us and how they're able to do things that we couldn't even fathom are possible or make connections that we wouldn't be able to make in, you know, a thousand lifetimes. That is going to be very apparent and the need for privacy is going to continue to grow and then

these coins are going to go up in value. And so I believe in Zcash and that's why it's probably. by a largest position outside of Bitcoin right now. Oh, interesting. And why did you say you don't think that Bitcoin should integrate privacy? And did you mean you didn't even think that Bitcoin should have it as an option? Like, you know, the way Zcash does shielded or unshielded? I mean, I guess I'm conservative in terms of this is a purpose area that works in Bitcoin.

And I think Bitcoin should be very conservative, right? It is the type of money that it is. It serves the use cases that it serves. and it does it very, very well and very, very securely. I don't think that it should take the risk to add these other things to its offering because there's other coins that were built from the ground up to do these things, and they're going to do them better. And so I think the conservative nature of Bitcoin should be maintained,

and that's going to, in my opinion, maintain the larger market share versus every other coin out there. Once you start tickering it with that, then I think the value proposition diminishes for Bitcoin. And do you have a particular privacy smart contract chain that you think is the one to bet on? I haven't really done much deep dive in any of those. Okay. Okay. All right. Well, so at the end of your recent essay, you hinted that you felt that near was, quote, your next favorite shit coin. So, and I'm assuming that's after hype and Zek. So explain why. So, again, if you've used the Zotal Zodal, I'm an investor, so please use it, download it.

It's, I think, the best UIUX for using shielded Zcash. So obviously, do you have a transparent address for Zcash? You know, if you're a transacted on some sort of centralized exchange or R2C broker, they send it to that address, then you pay a little bit of a fee to shield that Zcash. And I think anyone who owns Zcash and wants a price to go up should hold their Zcash shielded versus on a transparent address. And now, what can you do with the shield of Zcash? You can literally do a swap and send somebody any type of coin like UST on Tron or Bitcoin

network. And that transaction won't point back to you. So you can do it in a completely anonymous fashion using near intense. And so I think obviously you want to have some utility in terms of payment mechanisms and different currencies for shielded decash and using near intense. and, you know, in this great app, Zordola, and I think there are other apps that come out to put the same sort of functionality in place, that's going to drive demand for NIR and sort of change the narrative on what NIR is.

I know they're trying to do some AI stuff and maybe it works, maybe it doesn't, but I think that the core thing that is super special is that the integration between shield of Zcash using NIR intents to any crypto asset in an anonymous fashion. And, you know, the economics of the Near blockchain being that every turn of one of these transactions happens, the Neo Protocol earns a little bit of a fee. And that over time, if the volumes grow, will flip near from a deflationary to, sorry, an inflationary to a deflationary protocol. And that's what will cause the price to rocket higher. All right. So we are talking now after a really tumultuous April for crypto, where there were just a crazy number of hacks.

and, you know, one of them was one that started somewhere. I'm talking about Helpedow and then had just collateral damage, like, really throughout the ecosystem. But, you know, mainly in AVE, which, you know, at that time was the biggest DeFi protocol. I know it dropped from its top spot, but I don't know about now. But anyway, I was wondering, like, how do you think about, like, the risk on chain? Like, there's been a lot of, you know, chatter about, like, whether or not it's worth it. And you've invested in a number of different D5 protocols. Obviously, you're a big promoter of hype.

So how do you think about that risk? Number one, the risk is ever present. It is there. You cannot hand wave around it that there is no risk on chain. These are bare assets. And with that comes a certain amount of risk. Now, Tavits have a variety of choices to make in terms of their lifestyle to safety continuum, right? an ease of moving assets or ease of adjusting contract.

And some teams take the, okay, I'm going to make my life a little bit more difficult, but there's a lot more human elements to actually change things. I trust the other people who are with me in this journey to create this product, and therefore I believe that I am safe in that respect. Other teams say, I'm going to trust more automated solutions, or I'm just going to trust myself, and if I could come by us, we're fucked, right? One of one multi-sake, which we're kind of find. out is a lot of these implementations of these protocols. And so I think that if you take a look at

sort of the high level of whoever is hacking a lot of these larger protocols, they're socially hacking a process that by design is not very secure because, you know, the team chose a less lifestyle impacting security architecture and have suffered the consequences. And I think this falls on you as an investor, especially professional fiduciaries like, we, and otherwise to ask the questions about, okay, yeah, you can give me some sort of convoluted technical jargon about why, you know, this solution is not, you know, resisted the hacks. But okay, well, talk to me about the humans involved. How does this process work?

You don't have to tell me the specifics, but are you using a one of them? We're multi-sick. And if you say yes, right away. So I think a lot of these things, unfortunately, these are just bad decisions made by people who made a lifestyle choice in terms of how they want to deal with updating smart contracts and dealing with any sort of withdrawals, and obviously they were exploited. And that's unfortunate, but we'll wear no lessus. Okay. So we only have a couple minutes left. So I'm going to just ask you an open-ended question, which is about Maelstrom's investments. You know, you came on

the show, I think last time to talk about your private equity efforts. And I don't know if you want to call out, kind of any particular investment that you, you know, think is going to take off or how the private equity piece is going. But I just, yeah, leave you to give us any update you'd like to on Maelstrom. So we're very close to closing our first anchor investor. I can't really say the name on the show as of yet. Definitely, you'll hear about it once it's signed. In terms of investments, I think that when we first talked, founders' price expectations were much higher than they are today, which is great. And so I think if we're able to pull off this fundraise,

we're in a perfect spot of max disillusionment, disillusionment with the space. And, okay, unless it's micro strategy or some SPAC launched by some politically connected person, you're not investing in crypto as an institutional investor. Or, you know, you're worried about getting hacked on some defect protocols to your sort of abandoning the space or the VC overhang of selling as mean that everything is downed.

you didn't want to participate, which, again, takes down the valuations for very, very good businesses. And so raising this money now, we're at the perfect sweet spot. This is kind of like how I felt in 2023, where on the VC set of our portfolio, the early stage stuff, we were starting to deploy in a perfect time of maximum bearishness and disillusionment with the sort of shit coin investment complex. And so I think this is the best time to be investing. Prices have come down. We're going to get some great multiples on some amazing companies that are still very, very profitable. And when, you know, the tide turns and maybe that's when, you know, Bitcoin hits $200,000 and Eath decides that it wants to rise above whatever $3,000,000, whatever it is,

people all of a sudden want to run back into shitcoins and crypto adjacent businesses, then I think that we're going to be in a perfect position to really capitalize on our ability to invest in the downturn. Yeah, yeah, I would agree with that, like, a million percent because even though the markets are dim, like, clearly just crypto has reached a stage of maturity that just, yeah, it's just never been clear before. Well, Arthur, it's always a pleasure to chat with you. Thank you so much for coming on Unchained. Thanks for having me. Who in the group chat has the absolute worst sports takes?

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