Key Takeaways
- Arthur Hayes, BitMEX co-founder, believes extended US-Iran military engagement may force the Federal Reserve into rate reduction and monetary expansion
- He identifies a recurring historical trend dating to 1985 where significant US military operations in the Middle East preceded Fed monetary loosening
- Historical precedents include the Gulf War, post-September 11 campaigns, and the 2009 Afghanistan troop increase
- While maintaining a bullish long-term Bitcoin outlook, Hayes recommends delaying purchases until Fed policy actually shifts
- Bitcoin hovered near $66,200 when this analysis was released, representing approximately 47% below its peak price
In a detailed essay released March 2, Arthur Hayes—the co-founder behind cryptocurrency platform BitMEX—made the case that escalating US military operations involving Iran increase the probability of Federal Reserve interest rate reductions and expanded money supply.
According to Hayes, such monetary policy shifts would create favorable conditions for Bitcoin appreciation.
His thesis rests on what he describes as a consistent pattern observable since the mid-1980s. Hayes notes that every administration during this period has initiated military operations in the Middle East, with the Federal Reserve subsequently implementing various forms of monetary accommodation.
He highlighted three particular instances. When the Gulf War erupted in 1990, the Federal Reserve implemented rate decreases in both November and December despite ongoing inflationary pressures linked to oil prices.
Following the devastating attacks of September 11, 2001, Federal Reserve Chairman Alan Greenspan authorized an emergency 50-basis-point rate reduction. The subsequent military campaigns in Afghanistan and Iraq occurred alongside a prolonged period of monetary easing.
By 2009, when President Obama ordered an Afghanistan troop surge, interest rates had already reached zero and the Fed had initiated quantitative easing programs.
Hayes contends that Trump’s Iran involvement mirrors this established pattern. He suggests that bipartisan support for Iranian regime change since 1979 provides the Federal Reserve with political justification to implement accommodative policies in support of military objectives.
This past weekend saw coordinated US and Israeli military strikes against Iran that resulted in the death of Supreme Leader Ali Khamenei. President Trump has committed to continuing military operations.
Hayes Recommends Waiting Before Taking Action
Despite presenting a bullish case, Hayes isn’t advocating for immediate investment. He recommends waiting for concrete Federal Reserve action—actual rate cuts or monetary expansion—before increasing Bitcoin or alternative cryptocurrency positions.
“The time to back up the truck and buy Bitcoin and high-quality shitcoins is immediately after the Fed cuts rates and or prints money,” he wrote.
He also acknowledged uncertainty about how long Trump will stay committed to the conflict. He called the “prudent action” to wait and see.
Current Bitcoin Market Position
Bitcoin was changing hands around $66,200 when Hayes released his analysis. This represents a decline of nearly 30% compared to the previous year and sits roughly 47% beneath its record high of $126,000, achieved in October 2025.
The cryptocurrency has experienced five consecutive months of declines. The Crypto Fear and Greed Index continues registering extreme fear levels.
Market response to the Iran developments was relatively measured. US stock futures showed only modest declines Monday morning. The S&P 500 dropped less than 1%.
Oil prices initially surged but subsequently gave back nearly half their gains. The Kobeissi Letter, a macro-focused newsletter, observed that futures market activity was “not anywhere near WW3.”
Cryptocurrency social media platforms did experience increased “World War 3” discussion over the weekend based on analytics from Santiment, though mention volume remained below levels seen during the June 2025 Israel-Iran confrontation.
Bitcoin traded down roughly 1.9% for the day at publication time.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
