Cryptocurrency investor Arthur Hayes suggests Bitcoin’s price is less tied to U.S. Federal Reserve interest rates and more to the quantity of money in the global system, which could expand due to geopolitical instability. His analysis centers on four potential Middle East conflict scenarios and their impact on key shipping routes, arguing that central banks may be forced to increase liquidity regardless of policy decisions.
Arthur Hayes, the chief investment officer at Maelstrom, published an analysis arguing Bitcoin’s near-term direction depends more on Middle East war scenarios than on U.S. Federal Reserve policy. He stated his fund *“did f*ck all”* during a volatile first quarter, framing the outlook around whether ship traffic through the Strait of Hormuz is disrupted.
Hayes outlined four potential scenarios, dismissing a nuclear escalation as un-investable. The first “Back to Normal” scenario involves the war ending but persistent AI-driven deflationary pressure. The second involves Iran restricting the Strait and charging a toll, potentially weakening the U.S. dollar.
A third scenario emerged after former President Trump’s announcement that the U.S. Navy would block the Strait. Markets should focus on oil futures spreads to gauge real supply disruptions. The fourth scenario has the U.S. destroying Iran’s ability to block the Strait, which Hayes notes could prompt Iran to retaliate against Gulf energy production.
One core view throughout is that Bitcoin’s price is driven by the quantity of money, not its cost. Hayes argued governments will need to borrow heavily for defense and commodity stockpiling. If private buyers won’t absorb that debt, central and commercial banks will, expanding the money supply anyway.
Bitcoin was trading near $75,000 at the time of the report, having gained roughly 5% over the prior week. This performance outpaced the broader cryptocurrency market’s approximately 4% gain in the same period.
