Arthur Hayes eyes Fed easing bid as Iran strikes continue to echo into crypto markets

BTC swings about 8% in hours after Iran strikes, stays on a 5‑month losing streak as Hayes ties prolonged conflict to future Fed easing.

BitMEX co-founder Arthur Hayes published an analysis on March 1 examining potential connections between U.S. military involvement in Iran and cryptocurrency markets, according to his essay.

Hayes outlined what he characterized as a four-decade pattern of U.S. intervention in the Middle East followed by Federal Reserve monetary easing. The analysis suggested that extended U.S. engagement in conflict could increase the probability of Fed rate cuts or expanded money supply to finance military operations, which Hayes projected could affect Bitcoin prices.

The essay referenced historical precedents, including the 1990 Gulf War, when Federal Open Market Committee minutes from August of that year stated that “events in the Middle East had greatly complicated the formulation of an effective monetary policy,” preceding rate cuts later that year. Hayes also cited the Federal Reserve’s emergency meeting following the September 11, 2001 attacks, when then-Chair Alan Greenspan reduced rates by 50 basis points, referencing a “heightened degree of fear and uncertainty” affecting asset prices.

Cryptocurrency markets responded to recent geopolitical developments during weekend trading hours when traditional financial markets were closed. Bitcoin declined sharply within minutes of initial reports of strikes on February 28, according to market data. The asset subsequently reversed direction following reports regarding Iranian Supreme Leader Ayatollah Ali Khamenei’s death.

Hayes’ analysis noted that every U.S. president since 1985 has conducted military operations in the Middle East, with subsequent financial impacts addressed through monetary policy adjustments.

“The longer Trump engages in the extremely costly activity of Iranian nation-building, the higher the likelihood the Fed lowers the price and increases the quantity of money to support Pax Americana’s latest bout of Middle Eastern adventurism,” Hayes wrote in the essay.

Bitcoin has recorded five consecutive months of losses, a streak last observed in 2018, according to market data.

Hayes recommended a cautious trading approach given uncertainty regarding the duration of U.S. engagement and market tolerance levels. The former BitMEX CEO suggested that optimal purchasing opportunities for Bitcoin and other cryptocurrency assets would occur after the Federal Reserve implements rate cuts or resumes quantitative easing measures to support government objectives in Iran, rather than during initial conflict periods.