Arthur Hayes: “If the Iran war drags on, the Fed will ease” … Bitcoin could rise

Arthur Hayes, co-founder of BitMEX, argued that President Trump’s expanded military action against Iran is likely to ultimately lead to monetary easing by the US Federal Reserve (Fed), which could become a catalyst for a rise in Bitcoin (BTC) prices.

According to DL News, a digital-asset (cryptocurrency) outlet, on the 2nd Hayes said that if US and Israeli military operations against Iran become protracted, the Fed is likely to move toward rate cuts or expanded liquidity provision to shoulder the enormous wartime cost burden.

“US military intervention in the Middle East has ultimately resulted in greater money supply,” Hayes said, adding that “the moment the Fed cuts rates or provides liquidity to help the government achieve its objectives is an opportunity to buy Bitcoin and high-quality altcoins.”

He cited past precedents. During the 1990 Gulf War, the Federal Open Market Committee (FOMC) noted that uncertainty stemming from the Middle East situation made it difficult to formulate monetary policy, and rate cuts were carried out in November–December of that year. After the September 11 attacks in 2001, then-Fed Chair Alan Greenspan proposed an emergency 50bp rate cut through an emergency meeting, and the Fed implemented it.

Hayes argued that the current military action could follow a similar pattern. “The longer high-cost activities such as Iran’s reconstruction drag on, the greater the likelihood the Fed lowers rates and increases the money supply,” he said, stressing that “the solution was always cheaper and more abundant money.”

Bitcoin is currently trading around $66,000. That is about 50% below the peak of $126,000 recorded in October last year. Unlike the recent surge in gold and oil prices, Bitcoin has remained range-bound.

Hayes previously forecast in December that Bitcoin could reach $200,000 by March this year. However, some in the market are also urging caution, noting that if geopolitical tensions intensify, risk-off sentiment could strengthen, potentially amplifying volatility in the near term.

Even so, Hayes maintains that economic structural changes driven by the spread of artificial intelligence (AI) could also be positive for Bitcoin over the long run. He believes that in an environment of repeated large-scale fiscal spending and monetary easing, Bitcoin is likely to be re-rated as a hedge against currency debasement.