Bitcoin Could Rally if U.S.-Iran Conflict Extends for Months, Says Macro Strategist

Bitcoin Could Rally if U.S.-Iran Conflict Extends for Months, Says Macro Strategist

Bitcoin BTC $68,153.83 may emerge as a significant winner if a prolonged U.S.-Iran conflict drives sustained deficit spending, currency debasement and lower interest rates, according to macrostrategist Mark Connors. The combination of war-related government expenditures, expanding debt and looser monetary conditions historically creates favorable conditions for the leading cryptocurrency.

Connors, formerly head of research at 3iQ and global head of portfolio and risk advisory at Credit Suisse, now runs his own bitcoin advisory firm called Risk Dimensions. In recent comments, he outlined how extended geopolitical tensions could benefit bitcoin through multiple economic channels.

War financing requires governments to issue substantially more debt. This increases the money supply circulating through the financial system, effectively debasing the value of existing currency units. Non-dollar assets like bitcoin typically benefit from this dynamic, Connors explained.

“Liquidity drives bitcoin,” Connors said in an interview. If the conflict extends several months, he expects deficit spending to accelerate as the U.S. finances military operations. “If the war runs longer, that means more spending and more deficit spending. That’s constructive for bitcoin.”

The U.S. debt burden has already expanded rapidly. Federal debt has been rising at approximately a 14% annualized pace since mid-2025, according to Connors. Should this trend persist, annual debt growth could reach roughly 15% year-over-year, representing significant currency debasement.

Bitcoin reflected some of these dynamics immediately following initial U.S. military strikes on Iran. The cryptocurrency rallied as investors repositioned portfolios in anticipation of prolonged conflict. Since the first strikes, bitcoin has gained 3.6%.

However, war-driven increases in oil prices could complicate the outlook. Higher energy costs might push inflation upward, creating stagflationary conditions where growth slows while prices rise. Connors argued that even a stagflationary environment could ultimately support bitcoin.

In such scenarios, policymakers would likely prioritize financial stability and government financing over fighting inflation alone. This policy shift would create the liquidity conditions historically favorable for bitcoin.

The Federal Reserve operates under an additional mandate beyond its traditional dual mandate of price stability and maximum employment, according to Connors. The Fed must maintain smooth functioning of financial markets, particularly the Treasury market. Historical precedent includes interventions during the 2019 repo market crisis and policy reversals following regional bank failures in 2023.

“The Fed has to make sure the Treasury market functions,” Connors said. This constraint may push policymakers toward lower interest rates over time, especially as the government shifts toward issuing more short-term Treasury bills rather than long-term bonds.

Kevin Walsh, selected by President Trump partly for his dovish monetary stance, could become Federal Reserve chair in May pending Senate confirmation. A dovish Fed leadership would likely favor lower rates, supporting the conditions Connors identifies as constructive for bitcoin.

Lower interest rates directly benefit government finances when debt levels remain elevated. With larger portions of debt rolling over quickly through short-term borrowing, reduced short-term rates substantially lower the government’s interest costs.

The combination of falling interest rates and expanding deficits creates what Connors describes as an optimal backdrop for bitcoin performance. “When rates go lower and debt keeps rising, that’s the backdrop where bitcoin tends to perform well,” he explained.

This analysis presents bitcoin as a potential hedge against the fiscal and monetary consequences of extended geopolitical conflict. As governments finance military spending through increased borrowing and central banks maintain accommodative monetary conditions to support financial markets, historical patterns suggest alternative assets like bitcoin could benefit significantly.

The outcome depends substantially on the duration of U.S.-Iran tensions and policymakers’ responses to resulting economic pressures. Extended conflict combined with deficit spending and accommodative monetary policy would likely create the liquidity-rich environment Connors identifies as supportive for cryptocurrency prices.

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