BitMEX co-founder Arthur Hayes predicted on Wednesday that Bitcoin (BTC) will soar amid escalating geopolitical conflicts, inflation and increased government spending.
In a blog post, Hayes argued that the US government's fiscal response to the Middle East conflict will encourage more money printing and fuel the next bull run in Bitcoin prices.
“We know that war causes inflation. We understand that the U.S. government has to borrow money to sell bombs to Israel,” Hayes wrote. “We know that the Fed and the U.S. commercial banking system will buy off this debt by printing money and expanding their balance sheets. So as the war rages on, Bitcoin will explode at fiat prices. is known to rise.”
Hayes emphasizes that global conflicts, especially those involving the United States, tend to lead to financial expansion. He suggested that Bitcoin, as a decentralized asset, stands to benefit from more dollars flowing into the economy through government debt as investors seek protection from inflation.
“Even as conflicts in the Middle East escalate, the critical physical infrastructure that supports cryptocurrencies will not be destroyed.As energy prices soar, Bitcoin and cryptocurrencies will also rise.Newly printed “Hundreds of billions or trillions of dollars will reinvigorate the Bitcoin bull market,” he said.
Hayes cited the 1973 Arab oil embargo and the 1979 Iranian revolution as historical examples of how hard assets such as gold performed well during energy crises and high inflation. He believes Bitcoin, often referred to as “digital gold,” will work just as well in today's environment.
As tensions between Israel and Iran rise, Hayes warns that the destruction of energy infrastructure such as oil fields and the closure of the Strait of Hormuz could cause energy prices to soar. He argues that this will drive up the price of Bitcoin, as digital assets act like “stored energy in financial markets.”
However, he warned traders to prepare for volatility, suggesting the cryptocurrency market could face a drawdown if the conflict destabilizes global markets. “The object of the game is to right-size your positions,” Hayes added, noting that he has reduced some of his exposure to smaller cryptocurrencies amid the uncertainty.
He further said that Bitcoin's long-term trajectory will continue to rise due to monetary policy favoring debt-financed spending. The Federal Reserve's balance sheet is likely to grow as the United States continues to support Israel militarily with borrowed funds. Hayes noted that since its creation, Bitcoin has outperformed the Fed's balance sheet by 25,000%, underscoring its value as a hedge against the decline in the value of fiat currencies.
Although the geopolitical situation remains uncertain, Hayes insists that Bitcoin will grow. He advises traders to avoid emotional decisions related to political developments. “The best course of action is to put capital in a way that saves you and your family from danger, outweighs fiat currency deterioration, and maintains energy purchasing power.”
Edited by Stacey Elliott.
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