Arthur Hayes Warns Investors: Middle East Geopolitical Tensions Threaten Financial Markets
Arthur Hayes says Bitcoin could potentially rise due to inflation and increasing energy costs.
He believes increased US borrowing for military aid may lead to dollar inflation, benefiting Bitcoin.
Hayes advises investors to trade carefully and avoid making decisions based on moral stances.
ayes mentioned that investors and traders are in a risky situation now that China has begun a money printing exercise, and major countries are lowering the price and increasing the quantity of money. Should the battle between Israel and Iran get more serious and result in the destruction of oil infrastructure in the Middle East, the closure of the Strait of Hormuz, or even the deployment of nuclear weapons, it could lead to the crypto market dumping massively.
Scenarios that Could Boost Bitcoin’s Value amid Ongoing Geopolitical Tensions
The former BitMEX CEO described two possible outcomes of the conflict and how they could affect the global economy. He suggests that if the conflict between Israel and Iran devolves into minor, retaliatory acts, the persistent weak layer holds, and markets remain relatively stable. However, if the situation escalates, then the entire financial market, particularly Bitcoin , will feel the heat.
Escalation of the war could lead to the destruction of Bitcoin mining rigs. However, in a
Hayes expressed concern about how energy markets would react in the event of a major war. If key oil and gas fields were destroyed, oil prices could skyrocket, driving up the cost of other energy sources as well. However, this could be a good one for Bitcoin, as it could go up in value as energy prices get higher.
Monetary Policy and Inflation: How War Could Trigger Federal Reserve Intervention and Bitcoin Gains
Beyond energy, Hayes identifies monetary risks tied to the conflict. The United States, steadfast in its support for Israel, would likely increase borrowing to fund military aid, leading to a sharp rise in debt issuance. In response, the Federal Reserve might expand its balance sheet, further inflating the US dollar supply.
Hayes predicts that Bitcoin, which has historically outperformed during periods of Federal Reserve balance sheet expansion, would again rise in response to inflationary pressures. He :
“We know that war is inflationary. We understand that the US government must borrow money to sell bombs to Israel. We know that the Fed and the US commercial banking system will buy this debt by printing money and growing their balance sheets. Therefore, we know that Bitcoin will rise stupendously in fiat terms as the war intensifies.”
“We know that war is inflationary. We understand that the US government must borrow money to sell bombs to Israel. We know that the Fed and the US commercial banking system will buy this debt by printing money and growing their balance sheets. Therefore, we know that Bitcoin will rise stupendously in fiat terms as the war intensifies.”
