Arthur Hayes, co-founder of BitMEX, known for his bold predictions for Bitcoin (BTC) and all-coins in the cryptocurrency market, said that if the US-Iran war drags on, the Fed will lower interest rates, which would be positive for Bitcoin.
In his new blog post, Arthur Hayes stated that a prolonged military conflict between the U.S. and Iran would increase war-related costs, such as reconstruction, and could increase the likelihood of the Fed resorting to interest rate cuts and quantitative easing.
This situation could lead to increased liquidity and support the price of risky assets, especially Bitcoin.
“If US-Iran tensions escalate, increased fiscal spending will become inevitable. To support this, the Fed will likely either lower interest rates or expand monetary policy.”
In this scenario, increased liquidity could be a factor supporting the price of risky assets, particularly Bitcoin.
Citing historical examples, Hayes noted that the Fed made successive interest rate cuts after the start of the Gulf War in 1990. Similarly, after the September 11 attacks in 2001, when the US declared a “Global War on Terror” and became involved in conflicts in the Middle East, the Fed again immediately resorted to interest rate cuts in the face of financial market instability.
Hayes argues that regime change in Iran is a common goal for both Republicans and Democrats, and he believes this provides the Fed with a political justification for easing its monetary policy.
Hayes stated that the duration and scope of US intervention are currently unclear, and he believes the best time to buy Bitcoin and cryptocurrencies would be immediately after the Fed lowers interest rates or prints money.
“…We will begin to take a full position when we see a significant change in Fed policy. For now, we will maintain a wait-and-see approach.”
*This is not investment advice.
