BitMEX co-founder Arthur Hayes suggested the Federal Reserve could ease monetary policy amid growing tensions in the Middle East. This follows the United States and Israel attacks on Iran and the subsequent response by the latter across the region.
Bitcoin To Gain In Monetary Shift
The weekend was laced with rising geopolitical tensions after a series of attacks in Iran. As expected, macro markets remain skeptical as oil supply is affected and sentiments are slightly lower.
However, Hayes believes a prolonged conflict would play into Bitcoin’s favor, relying on historical trends. In a new Crypto Trader Digest, Hayes explained that the longer the United States continues operations in the Middle East, the more inclined the Feds are to increase the money supply.
Historically, this has been the case each time a U.S. President launched military strikes in the region. He added that every US President has embarked on some form of military action since 1985, and the Feds proceed to cut rates afterward.
Over the weekend, President Trump attacked Iran, a move many suggest was part of his political agenda in the country to quell its nuclear program. The strikes killed Iran’s Supreme Leader Ali Khamenei, sparking further attacks against U.S. bases in Saudi Arabia, the United Arab Emirates, and other countries.
A rate cut is always a bullish driver for crypto assets, especially Bitcoin, as more institutional capital flows to risky assets. Over the years, this driver has spurred new all-time highs and lifted the market out of the doldrums. On the flip side, tightening monetary policy erodes the value of crypto assets.
Per the note, Hayes suggests a wait-and-see approach to determine the duration of operation, when the Feds react, and how it impacts the market.
‘Sitting here today, 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. The prudent action is to wait and see…’
Similarly, most crypto analysts predict that the best time could be after the rate cuts, to avoid risks and prevent losses. At the time of writing, the Bitcoin price remains above $66,100 while the wider crypto market dropped less than 1% within 24 hours.
Source: https://zycrypto.com/arthur-hayes-projects-iran-escalation-could-trigger-fed-easing-and-bitcoin-price-explosion/
