There is no denying the fact that the AI boom has led to substantial financial gains. Stock prices of AI-based companies and chip manufacturers have seen massive returns over the last year. While many anticipate the pattern to continue over the coming years as AI takes stronger hold over society, others are skeptical whether the growth can sustain itself. Prominent cryptocurrency advocate and analyst Arthur Hayes believes that an AI bubble burst could redirect funds into Bitcoin’s (BTC) market. Let’s discuss.
Will AI Bubble Burst Benefit Bitcoin?
In a recent Substack article, Hayes likens AI capital expenditure (AI CAPEX) to “boring real estate.” Hayes says that eventually, construction of data centers will slow down. The slow down will likely expose over-leveraged AI companies and weak borrowers and financiers. Hayes believes the government will step up in the name of “national security.” However, Hayes states, “misallocation of capital will find its way into crypto … pumping Bitcoin to da moon!“
Hayes states, “As credit expands against a deceleration of AI CAPEX spend, Bitcoin will bottom and begin a secular rise.” The analyst believes that in a panic the authorities will print more money than they did during the 2008 financial crisis. This, Hayes believes, “will ultimately drive Bitcoin to one million and beyond.“
Also Read: 3 Stocks At Risk In Case Of An AI Bubble
Bitcoin (BTC) tends to gain when the larger financial system faces pressure. If we are indeed in an AI bubble, a burst could potentially lead to a large amount of money pivoting away from traditional assets and into Bitcoin (BTC) and the cryptocurrency market. Even Michael Burry, the financial analyst who predicted and benefitted from the 2008 housing crisis, believes we are in situation similar to the dot com bubble. Burry has shorted several AI companies, including Nvidia. Nvidia CEO, Jensen Huang, however, does not believe that a bubble will burst anytime soon. Huang says that the challenge lies in building as fast as the growth.