BitMEX co-founder Arthur Hayes published a new essay on March 2nd, arguing that prolonged U.S. military involvement in Iran would increase the likelihood of Federal Reserve interest rate cuts and money printing, ultimately driving up the price of Bitcoin.
His theory is based on a 40-year pattern. He expects the Fed to continue to loosen up after every major U.S. military operation in the Middle East, and he expects Iran to be no exception.
War and the Fed: A repeating pattern
In “iOS Warfare,” Hayes presented historical analysis linking U.S. military operations in the Middle East to the Fed’s subsequent monetary easing. He pointed out that every U.S. president since 1985 has launched missile attacks or all-out wars against countries in the Middle East, and the Fed has consistently lowered interest rates in the aftermath.
Hayes cited three precedents. During the 1990 Gulf War, under President George H.W. Bush, the Fed kept interest rates unchanged at its first post-war meeting, but signaled it could ease if the conflict dragged on. Despite continued oil-driven inflation, the central bank cut interest rates at its November and December 1990 meetings.
After the terrorist attacks of September 11, 2001, Federal Reserve Chairman Alan Greenspan imposed an emergency rate cut of 50 basis points, citing downward pressure on asset prices and the need to restore confidence in the economy. The subsequent wars in Iraq and Afghanistan involved extended de-escalation cycles.
When President Obama sent more troops to Afghanistan in 2009, interest rates were already at zero and quantitative easing was underway, leaving no room for further cuts.
Looking to the present, Hayes framed President Trump’s apparent support for regime change in Iran as following the same pattern. He argued that regime change in Iran has been a bipartisan goal among U.S. policymakers since 1979, giving the Fed political cover to ease monetary policy to finance it.
Mr. Hayes supported his argument with a graph showing that the share of the federal budget allocated to the Department of Veterans Affairs has grown twice as fast as total federal spending since 1985, while at the same time the effective federal funds rate has declined in the wake of major military interventions.
wait for cut
Despite the bullish long-term outlook, Hayes advised caution in the short term. He recommended investors wait for the Fed to actually cut interest rates or start printing money before adding exposure to Bitcoin or selecting altcoins.
“There is no telling how long President Trump will remain interested in spending billions, if not trillions, of dollars to reshape Iranian politics to his liking,” Hayes wrote. “The wise thing to do is to wait and see.”
At the time of publication, Bitcoin is trading at around $66,200, down nearly 30% year-over-year and about 47% below its all-time high of $126,000 set in October 2025. Bitcoin has fallen for five consecutive months, and the Crypto Fear and Greed Index has fallen into extreme fear territory.
