Optimism is gaining momentum across the crypto space. BitMEX founder Arthur Hayes predicts a powerful breakout for the two leading assets, forecasting Bitcoin to soar to $250,000 and Ethereum to hit $10,000 per coin by the end of 2025.

Hayes attributes the projected rally to ballooning US military expenditures. In 2024, America’s defense budget exceeded $1 trillion, and there is no limit in sight. Mounting geopolitical tensions, an ongoing conflict in Eastern Europe, and instability in the Middle East are all driving what Hayes calls a "runaway government borrowing."

Crucially, he argues that rising fiscal spending will not be funded through higher taxes, but rather through central bank balance sheets. That, in turn, is expected to push inflation higher and force the Fed to lower interest rates. Hayes views this as a necessary step in managing the mounting US debt burden. In such an environment, risk-on assets like cryptocurrencies are likely to outperform. According to Hayes, digital assets remain the most reliable hedge against fiat debasement and economic instability.

Rather than viewing inflation as a threat, Hayes frames it as a growth catalyst for the crypto market. He noted that Bitcoin and Ether tend to benefit from inflation, in contrast to food or real estate, where rising prices reduce the disposable income of the average person.

Hayes also highlighted improving regulatory dynamics in the US. With broad institutional support and policy tailwinds, a growing number of pension funds and large corporations are now investing in digital assets. This trend could accelerate, driven by tax incentives and more robust oversight of the crypto market.

Separately, Hayes expressed skepticism about the long-term prospects of startups that aim to launch new stablecoins. Many of these firms hope to go public, but Hayes warns that they may ultimately fall short.