TLDR

  • Arthur Hayes connects previous U.S. military engagements to Federal Reserve interest rate reductions and an expanding money supply.
  • He suggests a drawn-out war with Iran could force the Fed to adopt a more accommodative policy stance.
  • Bitcoin was trading around $66,200, representing an approximate 30% decline from the previous year.
  • Hayes recommends investors hold off on purchases until the Fed actually implements a rate cut.

BitMEX co-founder Arthur Hayes posits that U.S. military engagement with Iran might compel the Federal Reserve to increase the money supply. He contends that a prolonged conflict could result in interest rate reductions and other liquidity-boosting actions. Hayes is of the view that these measures would ultimately be favorable for Bitcoin and similar digital assets.

In a recent publication, Hayes observed that every significant U.S. military operation in the Middle East since 1985 has been followed by periods of monetary easing. He indicated the Fed might once again cut rates if government expenditures escalate due to a war with Iran.

History of War and Fed Policy

Arthur Hayes cited historical precedents to bolster his case. He referenced the Gulf War in 1990 during President George H.W. Bush’s administration. Initially, the Federal Reserve maintained interest rates but proceeded to cut them in November and December of 1990. A Federal Open Market Committee statement from August 21, 1990, pointed to increased uncertainty from Middle Eastern developments complicating monetary policy choices.

These rate reductions occurred despite rising inflation driven by oil prices. Hayes also highlighted the policy response following the September 11, 2001, attacks. Then-Fed Chairman Alan Greenspan executed an emergency rate cut of 50 basis points.

Greenspan remarked, “The events of last week have created a heightened degree of fear and uncertainty.” The subsequent wars in Iraq and Afghanistan saw the easing cycle persist. By the time of President Barack Obama’s 2009 troop surge in Afghanistan, interest rates were already near zero, and quantitative easing was ongoing. Hayes noted that with policy already highly accommodative, additional cuts were not an option.

Current Iran Tensions and Policy Outlook

Addressing the current situation, Hayes examined escalating tensions between the U.S. and Iran. Over the past weekend, Israel and the United States conducted airstrikes inside Iran. Reports indicated that the strikes resulted in the death of Iran’s Supreme Leader, Ali Khamenei. U.S. officials vowed to persist with military operations.

Hayes stated, “The longer Trump engages in the extremely costly activity of Iranian nation-building, the higher the likelihood that the Fed lowers the price and increases the quantity of money.” He asserted that changing Iran’s regime has been an objective for U.S. policymakers since 1979.

He further added that political backing for such a campaign could provide the Federal Reserve with the justification to ease policy. Rising federal outlays on defense and veterans’ benefits could also intensify fiscal strains. Hayes presented data indicating that spending by the Department of Veterans Affairs has outpaced overall federal expenditure growth since 1985.

Bitcoin Price and Trading Strategy

Bitcoin was valued near $66,200 at the time of reporting. The cryptocurrency has fallen close to 30% in the last year and remains roughly 47% under its all-time high of $126,000 from October 2025. The Crypto Fear and Greed Index is signaling extreme fear. Despite his positive long-term perspective, Hayes counseled prudence. He wrote, “The prudent action is to wait and see.”

He advised that market participants should await concrete rate cuts or new money-printing initiatives before raising their investment exposure. Hayes proposed that purchasing Bitcoin and certain alternative cryptocurrencies could be a sound strategy once the Fed changes its policy course. He reiterated that Fed easing connected to a U.S.-Iran conflict would likely bolster cryptocurrency markets. The immediate market reaction has been muted. U.S. stock futures opened with modest losses.

Oil prices retreated, surrendering some of their earlier advances. Mentions of “World War 3” on social media saw an uptick but stayed below levels seen during prior peaks in 2025. Hayes has also recently explored other potential catalysts for future monetary easing, such as new liquidity facilities and stress in international bond markets. Nevertheless, his most recent analysis centers on the prospect of the Fed printing money to finance an expanded U.S. conflict with Iran.