The Federal Reserve may ease its monetary policy to help finance a potential conflict with Iran, according to Arthur Hayes, co-founder of BitMEX. In a recent blog post, Hayes suggested that the Fed could lower interest rates and expand the money supply to support the government’s military efforts, a pattern he says has been consistent since 1985.
A Historical Pattern of Monetary Easing
Hayes points out that every U.S. president since 1985 has initiated military action in the Middle East, and each time, the Fed has responded by cutting rates or implementing other forms of monetary easing. He cited specific examples such as the Gulf War in 1990, the global war on terrorism following the 9/11 attacks in 2001, and the surge in Afghanistan in 2009.
Current Geopolitical Tensions
Recent tensions escalated significantly over the weekend when Israel and the U.S. launched airstrikes on Iran, resulting in the death of Iran’s supreme leader, Ali Khamenei. President Donald Trump has vowed to continue these actions, raising concerns about the potential for a prolonged and costly conflict.
Market Implications and Hayes’ Advice
Hayes advises investors to adopt a cautious approach, noting that the duration and financial toll of such a conflict are uncertain. “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, nor how much geopolitical and financial market pain he can politically tolerate before he cuts and runs,” Hayes wrote.
However, Hayes suggests that the time to invest in cryptocurrencies, particularly Bitcoin, would be immediately after the Fed cuts rates or prints money to support the government’s goals. “The time to back up the truck and buy Bitcoin and high-quality shitcoins is immediately after the Fed cuts rates and or prints money to support the government’s goals in Iran,” he added.
Market Reactions and Expert Opinions
Despite the spike in mentions of “World War 3” on crypto social media platforms, the actual market reactions have been relatively muted. According to data from Santiment, mentions remain much lower than during a similar spike in June 2025, when Israel launched strikes on Iran’s nuclear and military sites, leading to a 12-day conflict.
The Kobeissi Letter, a macro newsletter, noted that U.S. stock futures opened down marginally on Monday, indicating that the market is not yet pricing in a major conflict. Oil prices, which initially surged, have also retraced nearly half of their initial gains.
Looking Forward
While the immediate market impact of the recent tensions is limited, the potential for prolonged conflict and subsequent monetary easing by the Fed could have significant long-term implications for both traditional and crypto markets. Investors and analysts will be closely watching for any signs of Fed action and the broader economic and geopolitical landscape.
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