Geopolitical Tensions and AI Spending Could Propel Bitcoin to $126K: Hayes Insights
By Abdus Salam
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The ongoing conflict in Iran, coupled with a surge in artificial intelligence (AI) investments, may set the stage for a dramatic Bitcoin resurgence, pushing its value back to an anticipated $126,000 this year, asserts Arthur Hayes, the chief investment officer of the crypto investment fund Maelstrom.
In a recent Substack post, Hayes articulated how the geopolitical climate and the strategic race for AI supremacy between the United States and China are creating a favorable environment for cryptocurrencies. He posits that both nations are likely to pursue looser financial policies and increased fiat money printing as militarization and technological competition heighten.
Rising Military Spending Fuels Inflation
Hayes remarked, "Military spending is inherently inflationary, and the escalating war in Iran mirrors this trend. The prioritization of domestic investment in AI over traditional assets like U.S. Treasurys will necessitate further money printing." According to him, the political and financial impetus to dominate AI technology, which is increasingly linked to national security, is creating an environment ripe for cryptocurrency growth.
He further elaborated that, "Tomorrow there will be vastly more units of fiat currency than we see today, driven by a surge in capital expenditures in AI and electrification—this rate of change is accelerating."
Bitcoin's Robust Market Position
Despite a turbulent 2025, during which the cryptocurrency landscape experienced volatile fluctuations, Hayes remains bullish on Bitcoin. Last year saw the crypto market capitalization briefly soar to $4.28 trillion before a downturn ensued, triggering widespread debate among analysts about the timeline for a full recovery.
Drawing on the inflationary implications of war, Hayes classified Bitcoin's return to $126,000 as a 'foregone conclusion.' He believes Bitcoin's current trajectory is being significantly supported by an imminent atmosphere of expansive monetary policies. The chief investment officer indicated that the U.S. Federal Reserve might consider easing its monetary policies further to finance efforts in Iran, implicitly benefiting cryptocurrency.
As evidence of Bitcoin’s resurgence, recent trading data from CoinGecko suggests Bitcoin fluctuated between $79,467 and $82,496 in the past week, standing at approximately $81,000, representing a 31% increase from its February low of $62,822. In comparison, gold has seen modest gains, reflecting Bitcoin’s relatively stronger performance.
Anticipation of an Explosive Rally
Quote from Hayes: "Bitcoin bottomed earlier this year at $60,000, and with trillions of new dollars and yuan yet to be created, reclaiming $126,000 is almost certain." He anticipates that as Bitcoin breaches the $90,000 mark, those who had previously shorted the asset will be compelled to cover their positions, further catalyzing an explosive upward trajectory.
In summary, as military tensions and AI-driven investment strategies intensify, the cryptocurrency sector, particularly Bitcoin, appears poised for significant growth in 2026—with Hayes' analysis highlighting a tactical alignment between economics and geopolitics that could reshape financial landscapes.