Why Arthur Hayes Says Fed Chair Kevin Warsh Is a Dove Despite Hawkish Reputation | Markets Outlook

**Arthur Hayes** (0:00)
Let's call it zero to two years, two or three years from now, I think the AI bubble will burst, who knows when. It's number one, I would never short anything AI, even if I believe that some of these things are completely fugazi, but that's just a recipe for disaster. But at the end of the day, if the music's playing, you gotta dance.

**Jennifer Sanasie** (0:25)
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**Arthur Hayes** (0:54)
Thanks for having me.

**Jennifer Sanasie** (0:55)
All right, this is gonna be an easy breezy one. We're going into the long weekend over here in the US, and I wanted to get your take on three trending stories on social media.
And I wanna start here. Everyone is talking about Michael Saylor's strategy. They're talking about the business model. There's a CoinDesk clip that went viral today about Michael talking about when he was developing Stretch and using AI to help develop that offering.
Talk to me about how you're watching that story today, and what's your reaction when it comes to Strategy's business model?

**Arthur Hayes** (1:30)
So obviously, people have been very afraid of what happens when MicroStrategy has to sell Bitcoin to cover dividend payments or any sort of bond repayments. And so obviously, Saylor did this 32 Bitcoin test as he claimed to inoculate the market on Strategy selling Bitcoin. That's only prompted more questions. There's been other salacious hot takes of Saylor talking about some Jedi mind tricks about him not really saying that he never would sell Bitcoin and all those sorts of things. So I think people are very scared of what could happen on the downtrend. And obviously, overnight, there was a story. I haven't really read too much into it, but obviously, the market is traded down. I've heard some other people that I follow talking about this.
And I think this is part of the broader trend where that AI is doing really, really well and all available risk capital is going to AI trades and not going into crypto. And if you have micro strategy or fears that micro strategy might have to sell some Bitcoin for whatever reason that could add as an additional negative catalyst for the markets. And so I don't think that micro strategy is causing Bitcoin to fall. This is literally gets liquidity going to everything AI and nothing else. But this is just another pain point for investors.

**Jennifer Sanasie** (2:47)
Well, I know this is something you've been talking about, the AI bubble with capital rotating into the AI trade. When does it rotate back? I mean, what's your outlook for crypto? When does that bubble burst?

**Arthur Hayes** (2:59)
I don't say this is called zero to two years, two or three years from now. I think the the AI bubble will burst. Who knows when it's number one, I never short anything AI, even if I believe that some of these things are completely fugazi, but that's just a recipe for disaster. But at the end of the day, if the music is playing, you got to dance. And if you have a depreciating piece of fiat and all the activity is happening in the AI space, that's where you have to play. Because most people feel like they're on this treadmill, they're going backwards and they need to use leverage or trade the highest volatility instrument to sort of escape the basement that they're facing at the hands of governments around the world.

**Jennifer Sanasie** (3:40)
Speaking of governments, we heard from the US's new Fed chair yesterday.
And something that you spoke about on X, I saw was this announcement of the five task forces. Talk to me about how you watched the FOMC meeting yesterday. What are you taking away?

**Arthur Hayes** (3:56)
So previous to that, I've been listening and read a lot of different analysts and they fall into the situation at the Fed, and I think that the US Treasury and the US government and finances mean that the Fed will have to be dovish regardless of who was at the helm. And then there are those who say Warsh is going to bring back independence, sound money, all these things, prestige, back to the Federal Reserve. And so, I didn't know which way to lean on that, but it was a very big tell in this press conference in that if you take a look at Warsh's comments since he left the Board of Governors, I think in around 2010 or 2011, and he left as a protest of quantitative easing, and he's got many, many statements and op-eds and essays about the ways in which the Fed needs to change the way it operates, and then he gets in the head honcho's seat, and he asks for a task force.