Key Takeaways
- Arthur Hayes, BitMEX co-founder, predicts extended US-Iran military engagement may compel the Federal Reserve toward rate reductions and monetary expansion
- Hayes identifies a recurring trend beginning in 1985 where significant US military operations in the Middle East preceded Fed monetary loosening
- Historical precedents include the Gulf War, Afghanistan and Iraq wars following 9/11, and the 2009 Afghanistan troop surge
- While maintaining a bullish Bitcoin outlook long-term, Hayes recommends delaying purchases until the Fed implements actual policy changes
- Bitcoin traded near $66,200 when this analysis was published, representing a decline of roughly 47% from peak levels
Arthur Hayes, who co-founded cryptocurrency trading platform BitMEX, released an analytical essay on March 2 suggesting that US military operations against Iran increase the probability of Federal Reserve interest rate reductions and expanded monetary supply.
According to Hayes, such developments would create favorable conditions for Bitcoin appreciation.
His thesis relies on a historical pattern he identifies starting in 1985. Each American president during this period initiated Middle Eastern military campaigns, with the Federal Reserve subsequently implementing monetary accommodation measures.
Hayes highlighted three particular instances. The 1990 Gulf War saw the Fed reduce rates in both November and December despite ongoing oil-related inflationary pressures.
Following the September 11, 2001 terrorist attacks, Fed Chairman Alan Greenspan implemented an emergency 50-basis-point rate reduction. The subsequent conflicts in Afghanistan and Iraq coincided with a prolonged monetary easing period.
The 2009 Afghanistan surge under the Obama administration occurred when rates had already reached zero, prompting the Fed to deploy quantitative easing programs.
Hayes views Trump’s Iran approach as consistent with this established pattern. He notes that Iranian government transformation has remained a bipartisan US policy objective since 1979, providing political justification for Fed accommodative measures.
Recent developments included coordinated US and Israeli military strikes against Iran that resulted in the death of Supreme Leader Ali Khamenei. President Trump committed to ongoing military operations.
Hayes Recommends Measured Approach
Despite his optimistic long-term forecast, Hayes advises against immediate investment action. He suggests investors should await concrete Fed rate cuts or money printing initiatives 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 Price Action
Bitcoin was changing hands around $66,200 when Hayes released his analysis. This represents a year-over-year decline approaching 30% and sits approximately 47% beneath the asset’s $126,000 all-time peak reached in October 2025.
The digital currency has experienced five consecutive months of depreciation. The Crypto Fear and Greed Index continues registering extreme fear readings.
Financial markets displayed measured responses to Iran-related developments. US equity futures showed minimal downward movement at Monday’s opening. The S&P 500 declined less than 1%.
Crude oil prices initially surged before retreating by nearly half their gains. The Kobeissi Letter macro analysis newsletter observed that futures market behavior fell far short of “WW3” proportions.
Data analytics firm Santiment recorded elevated “World War 3” references across cryptocurrency social media platforms during the weekend, though mention volume remained below levels observed during the June 2025 Israel-Iran tensions.
Bitcoin had declined approximately 1.9% over 24 hours at the time of this report.
