Arthur Hayes says that the deepening conflict between the US and Iran could ultimately be a bullish setup for Bitcoin, not because the war is building up the markets, but because it could push the Federal Reserve into cheap and abundant money.
Why Bitcoin Can Go Up
In his March 2 article iOS Warfare, the founder of BitMEX put forward a simple idea: if President Donald Trump engages the US in a long and expensive campaign tied to Iran, the political and financial difficulties may increase the possibility of monetary easing. For Hayes, that’s more important than the argument itself. “As Trump undertakes the costly task of building an Iranian nation,” he wrote, “the likelihood of the Fed lowering the price and raising the money supply to support the latest Pax Americana of Middle East adventurism is increasing.”
Hayes’ argument is based on a historical pattern rather than a specific prediction of oil, geopolitics or battlefield outcomes. He points to US military involvement in the Middle East and says major conflicts were followed, or accompanied, by easy money policy. In his reading, wars not only damage self-esteem and strain public finances; they also create conditions where the Fed has cover to cut rates, support the currency and help stabilize asset markets.
To support that view, Hayes cites several episodes dating back to the 1990s. After the start of the Gulf War, he notes, the Fed initially stayed put but signaled that worsening conditions would force a change. From the August 21, 1990 FOMC meeting, he quotes: “Increasing uncertainty and poor economic performance resulting from events in the Middle East have made the formulation of effective monetary policy more difficult. expansion.”
He also highlights the Fed’s response after the September 2001 attacks and the launch of the Global War on Terror. In an emergency meeting, former Chairman Alan Greenspan said: “It is clear that the events of the past week, at least, have created a high level of fear and uncertainty that is putting significant pressure on commodity prices, increasing the likelihood of a fall in commodity prices, which has an obvious impact on the economy.
For Hayes, those episodes show that country shocks can be money events. His framework is not clear: when war destroys confidence, threatens growth or depresses markets, the policy response is usually lower prices and more liquidity. That, too, is the background that he believes tends to favor Bitcoin.
Still, Hayes isn’t calling for a risky trade any time soon. He says the market doesn’t know yet how long Trump will stay committed to rebuilding Iran, and how much market or political pain the administration can take before changing course. As a result, he says it’s a cleaner trade to wait for confirmation from policy rather than running a thesis early.
“The smart move is to wait and see,” Hayes wrote. “The time to back up the truck and buy Bitcoin and high-end shitcoins like HYPE is right after the Fed cuts rates again or prints money to fund government purposes in Iran.”
At press time, Bitcoin traded at $66,218.
The featured image was created with DALL.E, a chart from TradingView.com
Planning process because bitcoinist focuses on delivering well-researched, accurate, and unbiased content. We maintain strict sourcing standards, and each page is diligently reviewed by our team of senior technical experts and experienced editors. This process ensures the integrity, relevance, and value of our content to our readers.
