On March 2, 2026, Arthur Hayes released his latest analysis, stating bluntly that if the United States becomes deeply involved in the Iran conflict for an extended period, it will force the Federal Reserve to revert to monetary easing, making it the core driver behind rising Bitcoin prices. This assertion comes at a time when tensions between the US and Iran have sharply escalated: President Trump has confirmed a "major military operation" against Iran, reigniting the powder keg in the Middle East. According to Gate market data, as of March 2, 2026, the price of Bitcoin stood at $66,517, down 1.87% over the past 24 hours, as the market finds itself in a delicate tug-of-war between risk-off sentiment and expectations of monetary easing. Using Hayes’s analytical framework, this article will review the historical timeline, break down the logic behind both bullish and bearish perspectives, and explore potential scenarios for the evolution of crypto assets.
Arthur Hayes’s Core Thesis: How War Forces the Fed to Print Money
Arthur Hayes’s core argument rests on two pillars: historical patterns and policy inertia. He points out that since 1985, every US president has launched military action in the Middle East—Trump did not break this tradition. Based on this observation, Hayes proposes a straightforward causal chain: the longer the US is involved in Iran, the greater the war expenditure; the more likely the Federal Reserve is to cut rates or expand the money supply to support fiscal needs; and Bitcoin, as the asset most sensitive to US dollar liquidity, stands to benefit.
From a trading strategy perspective, Hayes remains cautious. He notes that it’s still unclear how much the Trump administration is willing to invest in "reshaping Iran’s politics"—whether it’s billions or trillions of dollars—or how much geopolitical and financial market turmoil it can withstand. Therefore, "the prudent approach is to wait and see." The real buying opportunity, he suggests, will come only after the Fed actually cuts rates or resumes balance sheet expansion.
Historical Echoes: The Fed’s Policy Path Since the 1990 Gulf War
Hayes’s argument is not just a loose historical analogy—it’s rooted in a concrete timeline of Fed policy responses. In his article, he traces the trajectory of US monetary policy following each major Middle East military intervention since 1990:
| Date | Military Action | Fed Policy Response |
|---|---|---|
| Aug 1990 | Gulf War under President George H.W. Bush | FOMC minutes show officials acknowledged Middle East events made policy "highly complex" and signaled that if war dragged on the economy, easing would be needed. The Fed cut rates consecutively in November and December that year. |
| Sep 2001 | Global War on Terror under President George W. Bush | After the attacks, the Fed held an emergency meeting. Then-Chair Greenspan stated that "fear and uncertainty" were depressing asset prices, necessitating rate cuts to support confidence, and the Fed accelerated its easing cycle. |
| 2009 | Obama’s troop surge in Afghanistan | The Fed was already at zero rates and in a QE cycle, with policy space exhausted, but the loose monetary environment objectively provided unlimited ammunition for the war machine. |
This timeline forms the "factual basis" for Hayes’s analysis: after each large-scale US military intervention in the Middle East, the Fed has tended to loosen rather than tighten monetary policy—even in the face of inflationary pressures (such as the rate cuts following the 1990 oil price surge).
Transmission Mechanism: From Fiscal Expansion to Bitcoin Price Movements
To understand Hayes’s logic, we need to break down the macro transmission mechanism behind it. He argues that war spending affects Bitcoin prices through two main channels:
- Fiscal Expansion: Modern wars are extremely costly. Hayes cites data showing that US Department of Veterans Affairs (VA) spending has grown at twice the pace of the overall federal budget, directly reflecting the long-term fiscal cost of war. Ultimately, these expenditures must be monetized or financed through debt.
- Monetary Policy: When fiscal expansion runs into economic headwinds or shaken market confidence, the Fed often acts as "the backstop." Whether it was the "hinted easing" in 1990, the emergency rate cuts in 2001, or the post-2008 QE, the core logic remains the same: lower the cost of capital and increase the money supply to support Pax Americana’s geopolitical strategy.
From a market data perspective, Bitcoin currently sits at the intersection of these two forces. According to Gate’s data, as of March 2, 2026, Bitcoin is priced at $66,517, with a 24-hour trading volume of $1.02 billion and a market cap of $1.33 trillion. Although Bitcoin briefly dipped to the $63,000 range after the outbreak of the conflict—demonstrating a classic risk-off reaction—Hayes’s focus is not on the immediate response, but on the potential monetary policy pivot if the conflict drags on.
Market Divide: Monetary Easing Expectations vs. Stagflation Risks
The "Iran conflict—Fed—Bitcoin" transmission chain has split the market into two sharply contrasting narratives:
Viewpoint A (Hayes’s Camp): Prolonged Conflict = Monetary Easing = Bitcoin Rally
Supporters argue that history doesn’t lie. Every Middle East war has ultimately led to a more accommodative monetary environment. If the Iran conflict turns into another "long war" like post-2001, the Fed will inevitably cut rates and expand its balance sheet to support fiscal needs and market confidence. In that scenario, Bitcoin, as a "barometer of liquidity," will undergo a new round of price repricing.
Viewpoint B (Stagflation Camp): Oil Shock = Persistent Inflation = Fed Cannot Cut, May Even Hike
Opponents emphasize the uniqueness of this episode. The current conflict coincides with underlying inflationary pressures in the US—since December last year, annualized wholesale prices have risen 3%, and core PCE may climb to 3.1%. More importantly, this shock is supply-driven: rising oil prices combined with tariff policies are directly pushing up production costs. Boston College economist Brian Bethune bluntly states, "The case for Fed rate cuts is evaporating before our eyes." BMO Capital Markets analysts even warn that if the conflict persists, the Fed’s next move could be a rate hike.
| Analytical Dimension | Viewpoint A: Easing-Driven (Hayes) | Viewpoint B: Stagflation-Constrained |
|---|---|---|
| Core Logic | War spending requires monetary support | Oil shock intensifies supply-side inflation |
| Historical Reference | Rate cuts after the 1990 Gulf War | Rate hikes after the 1970s oil crisis |
| Fed Constraints | Political pressure to support fiscal and markets | Inflation data limits easing scope |
| Bitcoin Impact | Easing liquidity → Price rise | Higher real rates → Price pressure |
Assessing the Reliability of the "War-Easing" Logic
Factually, Hayes’s timeline—1990, 2001, 2009—is accurate. FOMC meeting minutes do show that officials worried about the economic outlook due to Middle East wars and ultimately shifted to easing. (Fact)
However, directly projecting this historical pattern onto the 2026 Iran conflict is Hayes’s personal analytical view. The underlying assumption is that the macro backdrop and the Fed’s political alignment remain similar to the past. (Opinion)
The key uncertainty is inflation. Hayes’s scenario implicitly assumes that even if oil prices rise, the Fed will still prioritize supporting war-related fiscal spending and market stability over fighting inflation. But in 2026, the reality is that US inflation has just come off a historic 40-year high, and the Fed’s credibility is still in recovery mode. If oil prices unanchor inflation expectations, the Fed’s room to maneuver will be much narrower than in 1990 or 2001. So, the real divide between the "easing inevitability" and "stagflation constraint" camps is a judgment call on the Fed’s policy priorities (growth vs. price stability). (Speculation)
Structural Repricing of Crypto Assets: What If the Fed Pivots?
If Hayes’s scenario plays out—meaning the Fed pivots to rate cuts or balance sheet expansion due to a prolonged Iran conflict—the crypto industry would undergo a systemic repricing:
- Bitcoin’s "macro asset" profile strengthens: Bitcoin would again demonstrate its high sensitivity to global liquidity, solidifying its role as a "macro hedge" and attracting more traditional macro funds.
- Structural opportunities for altcoins: Hayes specifically notes that after the Fed acts, it’s not just Bitcoin—high-quality altcoins like HYPE also warrant attention. In a liquidity flood, capital typically spills over from Bitcoin into high-risk, high-beta altcoin projects.
- Industry narrative shift: The interplay between geopolitics and monetary policy would shift the crypto conversation away from "tech innovation" back to "macro hedging." Narratives around privacy and ZK technology may temporarily give way to those focused on inflation resistance and censorship resistance.
Conversely, if the Fed hikes rates, the crypto market could face ongoing liquidity drain, with Bitcoin’s correlation to risk assets like the Nasdaq strengthening, putting its "digital gold" safe-haven narrative to the test.
Bitcoin Price Scenarios Under the Iran Conflict
Based on current facts and market divisions, we can outline three possible scenario paths:
Scenario 1: Short-Lived Conflict + Fed Holds Steady
If military action ends within weeks and doesn’t cause sustained shocks to oil prices or the global economy, the Fed will stay the course. Bitcoin prices may revert to being driven by rate expectations and ETF flows.
Scenario 2: Prolonged Conflict + Fed Forced to Cut (Hayes Scenario)
If the conflict turns into a drawn-out war, oil prices remain elevated but not out of control, and economic confidence takes a hit. Under dual pressure from politics and economic slowdown, the Fed opts for rate cuts or resumes "Reserve Management Purchases" (RMP) and other de facto easing measures. Bitcoin could enter a medium-term uptrend.
Scenario 3: Prolonged Conflict + Runaway Inflation + Fed Hikes (Stagflation Scenario)
If shipping through the Strait of Hormuz is disrupted, oil prices soar, and inflation surges across the board, the Fed may be forced to abandon any thoughts of easing and instead hike rates to contain inflation expectations. This would create a classic stagflation shock, with Bitcoin caught between risk-off selling (downside) and fiat devaluation expectations (upside), leading to extreme volatility.
Conclusion
Arthur Hayes’s latest analysis essentially bets on history repeating itself: regardless of who occupies the White House or how inflation data shifts, the Fed will ultimately serve Washington’s geopolitical needs. This logic has a solid historical foundation, but it may face unique macro headwinds in 2026—a supply-driven inflation surge could tie the central bank’s hands more than in 1990 or 2001. For investors, rather than blindly siding with the "easing" or "stagflation" camps, it’s wiser to follow Hayes’s advice: wait and see, and let the Fed’s actual moves provide the answer. Until then, Bitcoin will continue searching for direction amid the fog of war and policy uncertainty.
