Bitcoin (BTC) could be the big winner if the U.S.-Iran conflict drags on for several months

Bitcoin Could Surge If U.S.-Iran Conflict Drags On, Warns Macro Strategist Mark Connors

As geopolitical tensions between the United States and Iran intensify, macro strategist Mark Connors is warning that a prolonged conflict could send Bitcoin soaring. With war comes massive government spending, rising debt, and the potential for lower interest rates—conditions that have historically fueled cryptocurrency growth.

In an exclusive interview with CoinDesk, Connors, the former head of research at 3iQ and global head of portfolio and risk advisory at Credit Suisse, explained that wars are inherently expensive. Governments typically respond by issuing more debt, which floods the financial system with dollars, effectively devaluing the currency. This “debasement” tends to benefit non-dollar assets like Bitcoin.

“Liquidity drives Bitcoin,” Connors said. “If the conflict extends into the next several months, we could see deficit spending 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 load has already been growing rapidly. Since mid-2025, federal debt has been rising at roughly a 14% annualized pace. If this trend continues, the debt could increase by about 15% year-over-year, further amplifying the debasement effect.

Bitcoin’s recent price action appears to reflect this dynamic. Since the first U.S. strike on Iran, the cryptocurrency has gained 3.6%, rallying overnight as investors pulled money out of equities and repositioned portfolios for the possibility of a prolonged conflict.

However, Connors cautions that a war-driven surge in oil prices could complicate the outlook by pushing inflation higher. Even in a stagflationary environment—where growth slows while prices rise—Bitcoin could still thrive. In such a scenario, policymakers would likely prioritize financial stability and government financing over fighting inflation alone.

“The Fed has to make sure the Treasury market functions,” Connors emphasized. He argues that the Federal Reserve operates under an additional mandate beyond its traditional goals of stable prices and maximum employment: maintaining the smooth functioning of financial markets, particularly the Treasury market. Authorities cannot allow disruptions like the 2019 repo market crisis or the regional bank failures seen in 2023 after aggressive rate hikes.

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. Lower rates are also more likely if Kevin Walsh—picked by President Trump partly for his dovish stance—becomes chair of the Fed in May, pending confirmation by the Senate.

With a larger share of debt rolling over quickly, lowering short-term rates would directly reduce the government’s interest costs. If rates fall while deficits continue to expand, liquidity conditions would likely improve—a combination Connors believes would favor Bitcoin.

“When rates go lower and debt keeps rising, that’s the backdrop where Bitcoin tends to perform well,” he said.

As the world watches the U.S.-Iran situation unfold, Bitcoin investors are keeping a close eye on the potential for a perfect storm of macroeconomic conditions that could send the cryptocurrency to new heights.

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