US-Iran Conflict May Lead to Fed Easing, Boosting Bitcoin

Arthur Hayes, co-founder of BitMEX, has presented a historical analysis linking US military operations in the Middle East to subsequent monetary easing by the Federal Reserve. His research suggests that every major US military campaign since 1985 has been followed by Fed rate cuts.

Hayes cited three precedents, including the 1990 Gulf War, the wars following the September 11 attacks, and President Obama's troop surge in Afghanistan. In each case, the Fed eased monetary policy to finance the conflicts.

Hayes argued that the current US military engagement with Iran is likely to follow the same pattern, given the bipartisan objective of regime change in the country since 1979. He supported his argument with a chart showing the percentage of federal spending allocated to veterans' affairs and declining effective Fed Funds Rates following major military engagements.

While Hayes predicts that rate cuts will ultimately boost Bitcoin prices, he advises investors to wait for actual policy changes before adding exposure to the cryptocurrency and select altcoins. He notes that it is uncertain how long the US government will remain committed to regime change in Iran and recommends caution in the near term.