Arthur Hayes, co-founder of BitMEX, argues the latest U.S. military escalation in Iran fits a 40-year pattern where war spending ends in Fed easing. In a March 1 essay, he frames the trade as simple: the longer Washington stays engaged, the higher the odds the Federal Reserve cuts rates or expands money to finance the effort, which he expects to lift Bitcoin over time. The thesis lands after BTC fell from $66,000 to about $63,600, then jumped toward $67,000 on reports Iran’s leader died, later near $66,800, down under 1% on the day, up 2.8%.
The historical pattern and the market playbook
Hayes anchors his case in history, arguing from Gulf War minutes to 9/11 cuts, conflict precedes cheaper money. He cites 1990 Gulf War documents where FOMC minutes in August said events in the Middle East “greatly complicated” monetary policy, followed by rate cuts later that year. He also points to the Fed’s emergency meeting after the September 11, 2001 attacks, when Chair Alan Greenspan cut rates by 50 basis points, explicitly citing a “heightened degree of fear and uncertainty” weighing on asset prices. He says every U.S. president since 1985 has repeated this pattern again.
Against weekend volatility, Hayes says the trade signal is not missiles, but the Fed’s response. He argues the “simple heuristic” is that the cost of nation-building leads to easing, writing that the longer Trump pursues costly Iranian “nation-building,” the more likely the Fed lowers the price of money and increases its quantity. With Bitcoin logging a fifth straight monthly loss, a streak not seen since 2018, and shedding nearly 15% in February, he advises patience. His tactic: “wait and see,” then buy after rate cuts or renewed money printing. That is when the opportunity appears.
For market participants, the takeaway is scenario planning around policy, not headline chasing. Hayes says it is unclear how long the U.S. stays engaged and how much geopolitical and market shock it can tolerate before stepping back, so he prefers a patient posture. Bitcoin’s price action reflects that tension: after the initial drop and bounce, it sat near $66,800, up 2.8% on the week but down more than 20% over the month. If easing arrives, Hayes expects the liquidity impulse to dominate; until then, he frames restraint as the edge. That is his risk-managed roadmap.
