Arthur Hayes Says the U.S. Reflation Logic Remains Intact: Maelstrom Is Nearly Fully Invested, Betting on an Upside in Crypto Markets

KEYTAKEAWAYS

TABLE OF CONTENTS

• KEY TAKEAWAYS
• BITCOIN TO BENEFIT FROM CREDIT EXPANSION
• OIL PRICES ARE NOT BITCOIN’S ENEMY
• MAELSTROM NEAR FULLY INVESTED
• PORTFOLIO STRATEGY REVEALED: BITCOIN AS THE CORE, SEEKING HIGHER-BETA NARRATIVES
• CLEAR ROTATION TRIGGERS: OIL PRICES AND CREDIT CONTRACTION AS RISK SIGNALS
• AS LONG AS LIQUIDITY HOLDS, THE BITCOIN NARRATIVE REMAINS INTACT
• DISCLAIMER
• WRITER’S INTRO

CONTENT

Arthur Hayes argues that U.S. election-driven reflation will keep credit expanding, benefiting Bitcoin and crypto assets, as his fund Maelstrom moves close to full deployment to position for an upside cycle.

BITCOIN TO BENEFIT FROM CREDIT EXPANSION

Hayes argues that the fundamental logic of U.S. politics has always revolved around electoral outcomes, and that the key factors influencing median voters’ decisions are economic growth and inflation. Among inflation indicators, energy prices—especially gasoline prices—carry the greatest political sensitivity.

Against this backdrop, he believes that in upcoming election cycles the U.S. government will inevitably pursue two objectives simultaneously: first, boosting nominal GDP and asset prices through fiscal deficits and credit expansion; second, keeping energy prices as low as possible to prevent inflation from eroding electoral support.

This policy mix implies a continued expansion of dollar supply. Hayes has long maintained that Bitcoin and certain crypto assets are direct beneficiaries of fiat credit expansion.

OIL PRICES ARE NOT BITCOIN’S ENEMY

Addressing the common market concern that higher energy costs could suppress Bitcoin, Hayes emphasizes that Bitcoin is a highly monetized asset. Because mining energy costs affect all miners simultaneously, oil prices themselves do not constitute a direct downward pressure on Bitcoin’s price.

The real risk lies in whether a rapid rise in oil prices forces governments and central banks to tighten monetary policy. If energy-driven inflation spirals out of control and pushes up U.S. 10-year Treasury yields and bond market volatility, policymakers may be compelled to hit the brakes. As such, Hayes notes that crypto investors do not need to predict complex geopolitical outcomes; they only need to watch two market indicators:

• U.S. 10-year Treasury yields

• The MOVE Index (U.S. bond market volatility)

Only when yields approach 5% and the MOVE Index spikes sharply do risk assets need to be on high alert.

MAELSTROM NEAR FULLY INVESTED

Beyond macro views, Hayes explicitly discloses Maelstrom’s current investment posture. He states that as the firm enters 2026, its overall risk exposure is close to fully deployed, signaling that it is backing U.S. reflation and a crypto market upswing with real capital.

At present, Maelstrom continues to allocate cash flows generated from trading and financing activities into Bitcoin as its core holding, while maintaining a low allocation to U.S. dollar stablecoins—reflecting strong confidence in continued expansion of fiat liquidity.

PORTFOLIO STRATEGY REVEALED: BITCOIN AS THE CORE, SEEKING HIGHER-BETA NARRATIVES

In terms of specific positioning, Hayes explains that Maelstrom is not merely passively holding Bitcoin and Ethereum. Instead, it seeks excess returns during the credit expansion cycle by rotating into higher-beta crypto assets. The strategy includes:

• Selling portions of Bitcoin at appropriate times to reallocate into privacy-related tokens

• Selling portions of Ethereum to build positions in DeFi-themed assets

Hayes specifically highlights “privacy” as the next major crypto narrative, naming Zcash (ZEC) as a potential primary beta for this theme. He reveals that Maelstrom began building privacy-related positions in the third quarter of 2025.

CLEAR ROTATION TRIGGERS: OIL PRICES AND CREDIT CONTRACTION AS RISK SIGNALS

Despite its current high-risk positioning, Hayes stresses that this is not an unconditional bullish stance. If rising oil prices lead to a slowdown in credit expansion, Maelstrom would take profits, rebuild Bitcoin exposure, and allocate part of the portfolio to staked Ethereum products (such as mETH).

In his view, the true risk is not short-term market volatility, but whether governments are forced to stop printing money. As long as electoral politics continue to dominate policy direction, the probability of such a scenario materializing in the near term remains low.

AS LONG AS LIQUIDITY HOLDS, THE BITCOIN NARRATIVE REMAINS INTACT

In summary, Arthur Hayes believes that in a politically driven reflationary environment, the United States is highly unlikely to tighten credit proactively. As long as dollar liquidity continues to expand, Bitcoin’s core narrative as a hedge against fiat monetary expansion remains valid. Maelstrom’s near fully invested stance demonstrates that Hayes is not merely expressing an opinion, but actively backing his thesis with capital.

Original Article