Source: Arthur Hayes, founder of BitMex; Compiled by: Golden Financial Claw

As Maelstrom trading went quiet in the first quarter, many brokers occasionally messaged me asking what I thought of the market and what they could do for us. I responded unanimously: "This is a no-trade zone." Except for slowly increasing our long position in Hyperliquid, we basically did "nothing" in the first quarter.

The intersection of the two events creates a trading vacuum, at least for our long-term long positioning. First, the proliferation of AI agents (i.e. “Claws”) will destroy the career prospects of ordinary knowledge workers in the flexible workforce of advanced Western economies (mainly Pax Americana), which will trigger a deflationary financial collapse. I detailed this in my article "Everything is fine" (see Golden Finance's previous article "AI triggers US financial crisis").

Since the publication of this article, in order to turn Iran into the latest "Trashcanistan", US Chief President Donald J. Trump has launched an unjust and selective war against Iran with the support of the bellicose and down-and-out "backing singer"-Israeli Prime Minister Benjamin "The Butcher of the Bedouin" Netanyahu. Nearly seven weeks into the war, the only important question now is what arrangements will be made regarding the flow of commodities and cargo through the Strait of Hormuz.

Before I express my views on war or geopolitics, I always say this: I'm just a crypto athlete who loves skiing and two-steppin'. I knew nothing about fighting a war and had no inside information about the intentions of global leaders. But I can decipher the prevailing propaganda narrative and use my AI agent to perform simple mathematical calculations based on publicly available information. I try to strip away the noise and focus on the things that matter to my portfolio. Thankfully, I do not live in the Levant or the Middle East, so my life and freedom are not in danger.

In my simple worldview, there are three scenarios worth considering; there are actually four, but the fourth - nuclear apocalypse - is uninvestable, so there's no point in writing about it. I’ll go through each one one by one and discuss how they will impact the price of Bitcoin from a high-level perspective. I don't know the probability of each scenario happening, but what I want to know is: is there a way to construct a portfolio that will absolutely outperform the price of hydrocarbons (and their derivatives like food and fuel) in the best case, and even underperform hydrocarbons in the worst case, will outperform all major asset classes.

Scenario 1: Return to normalcy

In this scenario, the war ends immediately and the pre-war status quo returns. Yet the long-term trend of replacing expensive, digital symbol-manipulating knowledge workers with cheaper, more efficient AI agents continues. The U.S. economy is the most affected, as about 70% of its GDP is driven by consumer spending. Consumers financed their materialism with bank credit, and these loans became assets on banks' balance sheets. If the ability of ordinary knowledge workers to repay their debts evaporates, these banks will become functionally bankrupt, requiring central bank clowns to print large amounts of money to bail them out.

Scene 2: Tehran Toll Station

In this scenario, the U.S. military is unwilling or unable to prevent Iran from restricting ships from passing through the Strait of Hormuz. Iran made good on its promise to allow "friendly" ships to pass by paying a $2 million toll, which could be paid in yuan, cryptocurrency, sanctioned U.S. dollars or other diplomatic arrangements.

The worst-case scenario for the financial hegemony of "American rule" is that countries must now raise renminbi. Given that most countries have trade deficits with China, the only way to raise RMB on a large scale is to sell U.S. dollar assets (such as U.S. Treasuries or U.S. Big Tech stocks), buy physical gold, and then sell the gold for RMB through the Shanghai or Hong Kong gold markets. Among the top ten economies in the world, only Brazil and Russia hold trade surpluses with China, and they rank only ninth and tenth.

In contrast, the "American Rule" has the world's largest trade deficit, which is supported by an equally large capital account surplus. However, the U.S. capital surplus is mathematically bound to fall as countries sell dollar assets to raise yuan or fill commodity gaps in spot markets at extremely high prices. The financialized U.S. economy requires foreign capital to finance government spending; without it, the books don't align. Eventually, lower bond prices (and higher yields) and lower stock markets will force governments to provide funding by printing money.

Scene 2.5: The United States blocks the Strait of Hormuz

An interesting turning point occurred. After U.S.-Iran talks failed to reach a permanent ceasefire, Trump announced on Sunday, April 12, that the U.S. Navy would block all ships entering or leaving the strait. Perhaps this blockade will evolve into a "Robber Baron Tollgate" where ships must pay their toll twice, first to the Iranians and then to the Americans. Or there could be so many ex post facto exemptions issued to individual countries that the lockdown resembles a piece of moldy Swiss cheese. The above point still stands: if holding dollars doesn’t guarantee that pirates won’t blow up your ship, what’s the point of holding it?

Scene 3: The Empire bombs again

In this situation, the U.S. Air Force and Navy each performed their duties and destroyed the Iranian Revolutionary Guard Corps (IRGC)'s ability to intercept shipping through punitive standoff bombing operations. The strait has reopened and any vessel can pass safely without additional fees. The restoration of imperial authority eliminates the need for countries to use any currency other than the U.S. dollar and to snap up expensive goods on the spot market—at least for a few days.

The problem is that ending Iran's control of the Strait of Hormuz would likely mean the utter destruction of the entire country. Or, as Trump puts it, “send them back to the Stone Age.” Many bloody Americans who grew up with "Iran is the leader of evil" propaganda will cheer this tough stance. However, destroying Iran in this way means that before Iran takes its last breath, it will fulfill its promises and take the entire Gulf region's commodity and energy production with it. Oil (The spice) will never flow out again, and global central banks will have no choice but to print money like crazy in response to the surge in commodity prices to save the global financial system.

If you live in some "bad country", your currency will experience hyperinflation against the dollar or ruble. The United States and Russia will be the only large regulation producers left capable of filling the gap left by the ruins of the Middle East. There will be famine and general social unrest. So, while your Bitcoin may be worth an infinite number of units of toilet paper fiat, your well-being is at serious risk if you fail to escape in time.

Before discussing the performance of Bitcoin in various scenarios, let us provide visual evidence for my argument through some "charts".

Chart analysis of major scenarios

Return to normalcy

I have discussed this situation in detail in "Everything is Well", and here are some of the charts and tables from that time:

All in all, the deflationary depression caused by AI agents is as severe as the 2008 U.S. subprime mortgage crisis.

Consumer credit default rates are already rising, and the wave of mass layoffs hasn't even really begun.

Tehran Toll Gate

Essentially, once this scenario occurs, it will mean the end of the petrodollar system and the rise of a new global reserve currency or a basket of currencies. At present, the Iranian Revolutionary Guards is quite flexible in terms of payment methods. But if they have consolidated control of the strait, why should they continue to accept U.S. dollar tolls when the United States does everything possible to restrict their use of U.S. dollars? Eventually, I think they will no longer accept U.S. dollars. The renminbi and gold are likely to become the two major currencies for sovereign trade.

If it is necessary to buy gold in exchange for RMB before navigation, then what reason does any country have to reserve US dollars? Given that most major economies have deficits with China, the only way to raise RMB is to sell US dollars, buy gold, and then exchange them for RMB. From now on, the country must reserve its trade surplus in gold rather than U.S. debt or stocks.

To highlight the growing use of the RMB in trade, I highlight a few charts published by Luke Gromen, which show that a pseudo-RMB—a gold standard—is quietly taking shape.

Step 1: Sell U.S. dollar assets (U.S. bonds) and buy gold

Since the war began, the Fed’s holdings of foreign securities under custody have declined by a net $63 billion. I use this as a directional indicator for foreign investors to reduce their holdings of U.S. Treasuries and other U.S. dollar securities (such as stocks).

What did the seller do with the dollars?

Gold has been the top U.S. export in four of the past five months, rising 342% year-on-year.

They buy gold in U.S. dollars and ship it out of the United States. That’s it for the so-called renaissance of American manufacturing. All that’s left of the United States is a “barbaric relic.” Sorry, all the Trump supporters counting on taking back high-paying factory jobs. Another presidential cycle, and once again blue-collar workers are being brutally raped without any lubrication.

Step 2: Sell gold for RMB

Swiss refineries receive U.S. gold and recast it into standard gold bars suitable for shipment to China.

Step Three: Pay Tehran Tolls

Bessent is not joking: "Either keep the US dollars on your body, or suffer another round of sanctions." Affected by US sanctions for nearly fifteen years, Iran cannot use the SWIFT payment system. To transfer yuan into an Iranian Revolutionary Guards account, China's CIPS system must be used. As shown in the figure, its trading volume increased significantly after the outbreak of war.

This series of charts clearly shows the flow of funds: selling US dollar assets → buying gold → ultimately paying Tehran or other suppliers in yuan. It doesn’t matter that the dollar still dominates trade. Markets are forward-looking, so the acceleration of the yuan's use in global trade is more important than its absolute low size relative to the dollar. Only by reducing holdings of U.S. dollar assets before market consensus recognizes the arrival of the new monetary system can investors protect their investment portfolios. The pound did not technically lose its global reserve currency status until the Bretton Woods system in 1944, but the U.S. dollar realistically replaced the pound as early as the early 20th century as the U.S. economy became the most productive in the world.

In 2026, the United States will have trade deficits with the most productive economies such as China, Japan, South Korea, Germany, and Taiwan. And most countries run deficits with China. Let me stress it again: If you have to pay those Stone Age guys in RMB to get the goods, what’s the point of stocking up on US dollars?

The Stars and Stripes blockade the Strait of Hormuz & the Empire bombs again

If you want to judge whether the strait is open or blocked, just look at the chart above, or a similar chart generated by any market software. The chart above shows the price of May 2026 WTI crude oil futures (CL1, white) versus the October contract (CL6, gold). I chose WTI because this benchmark is most relevant to U.S. gasoline consumers. Trump will only materially de-escalate the situation if gasoline prices remain high until the November midterm elections.

The lower part of the chart is the price difference between the two contracts (far month minus near month), and the curve is in a backwardation state. Since oil prices in far months have not increased as much as in recent months, the market believes that the flow of oil across the Strait will improve significantly. If that comes true, the collapse in prices in recent months will push up spreads. But if prices rise in far months and spreads narrow, the global economy will be in jeopardy. Forget the war of words between Trump and Iran’s Revolutionary Guards, just stare at this picture.

Currency quantity vs currency price

After the war broke out, the two-year Treasury yield (white) surged sharply above the effective federal funds rate (gold). This shows that the market believes that the Federal Reserve will raise interest rates to combat energy inflation.

It's time to take sides. Do you think the quantity of currency is more important, or the price of currency, when pricing Bitcoin? I believe it isthe quantity of money that determines the price of Bitcoin. Bitcoin has no cash flows, so discount rates derived from central bank policy rates are meaningless in valuing this magical internet currency. However, given that the supply of Bitcoin is fixed, its legal currency value depends on the total stock of legal currency.

It is important to form a judgment on this because I think we may enter a situation where Major central banks, including the Federal Reserve, may raise interest rates while printing money directly or through the commercial banking system. As wars push up food and energy prices, capable governments will subsidize the prices of core inputs in the economy, otherwise they may trigger social unrest or famine. However, in order to prevent inflation from spreading across the board, the central bank must raise interest rates to curb demand in credit-sensitive areas and destroy aggregate demand. Subjects who borrow for consumption will reduce spending when the cost of credit rises.

If central banks only go so far, my Bitcoin prediction will be simple: Bitcoin prices will fall in an environment where people are cutting back on spending across the board except food and energy. But whether they are friends or foes of the U.S. system, all countries must increase defense spending and stockpile critical commodities. Do you want your country to be like Australia? It relies almost 100% on Chinese imports for its refined hydrocarbons. China stopped exporting as soon as the war began, and Australia had less than a month's reserves. They have to beg Singapore and pay undoubtedly sky-high prices for jet fuel, otherwise all those "hillbillies" will be stuck on the Australian mainland forever... I know some of you will gloat about this, especially Japanese ski enthusiasts.

Building bombs (especially nuclear bombs) to avoid being turned into a dumpster, combined with hoarding commodities, requires significant government debt. If domestic private investors are unwilling or unable to purchase these junk government bonds, the central bank and/or commercial banks must print money to buy them, thereby expanding the supply of fiat currency.

The coexistence of rising central bank policy interest rates and expansion of money supply will lead to divergent trends in risk asset prices. Assets valued based on discounted cash flows plummet as currency prices rise. Assets with fixed or near-fixed supply, such as Bitcoin and gold, will rise as central banks and commercial banks expand credit to fund wars and commodity reserves.