Former Bitmex CEO Arthur Hayes shared his analysis on Wednesday of the impact of escalating tensions between Israel and Iran on bitcoin and the broader crypto market. He warned that an intensified Middle Eastern conflict, particularly if it disrupts oil infrastructure or leads to a broader war, could significantly affect global markets.

“An intensified Middle Eastern conflict will not destroy any critical physical infrastructure supporting crypto,” he opined, adding:

The hundreds of billions or trillions of newly printed dollars will re-energise the bitcoin bull market.

“Bitcoin is stored energy in digital form. Therefore, if energy prices rise, bitcoin will be worth more in terms of fiat currency,” he explained.

Hayes outlined the risks, focusing on three key areas: physical destruction, energy price hikes, and monetary policy. He argued that while bitcoin mining might be disrupted in regions like Iran, this would have minimal long-term impact on the network.

The real issue, according to Hayes, is how rising energy costs could affect the market. “We know that war is inflationary. We understand that the U.S. government must borrow money to sell bombs to Israel. We know that the Fed and the U.S. 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,” the former Bitmex executive detailed.

Despite his optimism for bitcoin’s long-term growth, Hayes cautioned that the crypto market could face significant volatility, especially for smaller cryptocurrencies. He advised investors to be cautious and appropriately size their positions:

Just because bitcoin will rise over time doesn’t mean there won’t be intense price volatility, nor does it mean every shitcoin will share in the glory.

In conclusion, Hayes remains confident in bitcoin’s resilience, especially as the U.S. and other countries engage in inflationary monetary policies. He advised investors to be prepared for volatility in the short term, particularly in light of the uncertain geopolitical situation in the Middle East.

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