Bitcoin trades near $66,200, down 47% from its October 2025 all-time high, with fear sentiment at extremes.
BitMEX co-founder Arthur Hayes published a new essay on March 2 arguing that prolonged US military engagement with Iran would increase the likelihood of Federal Reserve rate cuts and money printing, ultimately driving Bitcoin higher.
His thesis rests on a four-decade pattern: every major US military campaign in the Middle East has been followed by Fed easing, and he expects Iran to be no different.
In “iOS Warfare,” Hayes presented a historical analysis linking US military operations in the Middle East to subsequent monetary easing by the Fed. He noted that every US president since 1985 has launched missile strikes or full-scale wars against Middle Eastern countries, and that the Fed consistently lowered interest rates in the aftermath.
Hayes cited three precedents. During the 1990 Gulf War under President George H.W. Bush, the Fed held rates steady at its first post-war meeting but signaled easing was likely if the conflict dragged on. The central bank cut rates at its November and December 1990 meetings, even as oil-driven inflation persisted.
After the September 11 attacks in 2001, Fed Chair Alan Greenspan pushed through an emergency 50-basis-point rate cut, citing downward pressure on asset prices and the need to restore economic confidence. The wars in Iraq and Afghanistan that followed were accompanied by an extended easing cycle.
Under President Obama’s 2009 troop surge in Afghanistan, rates were already at zero, and quantitative easing was underway, leaving no further room for cuts.
Turning to the present, Hayes framed Trump’s apparent endorsement of regime change in Iran as following the same pattern. He argued that Iranian regime change has been a bipartisan objective among US policymakers since 1979, giving the Fed political cover to ease monetary policy to finance the effort.
Hayes supported his argument with a chart showing that the percentage of the federal budget allocated to the Department of Veterans Affairs rose twice as fast as aggregate federal spending since 1985, alongside declining effective Fed Funds Rates following major military engagements.
Despite his bullish long-term outlook, Hayes advised caution in the near term. He recommended investors wait for the Fed to actually cut rates or begin printing money before adding exposure to Bitcoin and select altcoins.
“We do not know how long Trump will remain interested in spending billions, if not trillions, of dollars reshaping Iran’s politics to his liking,” Hayes wrote. “The prudent action is to wait and see.”
Bitcoin was trading around $66,200 at the time of publication, down nearly 30% year-over-year and roughly 47% below its all-time high of $126,000 reached in October 2025. The coin has fallen for five consecutive months, with the Crypto Fear and Greed Index stuck in extreme fear territory.
