Arthur Hayes forecasts Fed printing as Trump’s Iran war ramps up. Here’s what that means for the price of Bitcoin

Arthur Hayes says the US-Israel war on Iran will send Bitcoin’s price soaring.

The Maelstrom chief investment officer argues that every major US military adventure in the Middle East ends the same way — with the Federal Reserve printing more money — thus boosting the prices of assets like Bitcoin.

“The time to back up the truck and buy Bitcoin and high-quality [altcoins] like HYPE is immediately after the Fed cuts rates and or prints money to support the government’s goals in Iran,” he wrote.

Hayes cited decades of data showing that US military campaigns, ballooning federal outlays, and subsequent Fed interest rate cuts have been catalysts for Bitcoin’s price.

“The longer [Donald] 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,” Hayes said.

In other words, to support the government’s war effort, policymakers will cut rates and expand the money supply, he argues.

Hayes bullish call comes as Bitcoin’s price is stalling near $66,000, or almost 50% below its October peak of $126,000. That’s despite gold and oil surging after the US and Israeli strikes on Iran on Saturday killed Supreme Leader Ali Khamenei and unleashed market uncertainty.

In December, he predicted that Bitcoin’s price would reach $200,000 by March.

Hayes’s calls are increasingly at odds with market consensus.

For example, he predicts that a massive disruption to the economy by artificial intelligence will be beneficial to Bitcoin’s price, rather than drag the top crypto down.

Hayes’ history lesson

Hayes backs his claim with statements from the Federal Open Market Committee during past conflicts.

During the 1990 Gulf War, policymakers warned that “heightened uncertainties” stemming from events in the Middle East had “greatly complicated the formulation of an effective monetary policy,” he said.

By November and December that year, the Fed had cut rates, citing weakening market confidence and economic strain.

In 2001, after the September 11 terror attacks, Fed chair Alan Greenspan moved swiftly.

“The events of last week… have created a heightened degree of fear and uncertainty,” Greenspan said at an emergency meeting, proposing a 50-basis-point cut. The Fed obliged, and markets stabilised.

Hayes now argues that Trump’s latest military foray fits squarely into that lineage.

Military engagements cost “hundreds of billions, if not trillions, of dollars,” he wrote.

“The cure, as always, is cheaper and more plentiful money.”

Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email him at [email protected].