Macro strategist Mark Connors says Bitcoin could benefit if tensions between the United States and Iran evolve into a prolonged conflict, as war-related spending, expanding government debt and potentially lower interest rates create conditions that have historically supported the digital asset.
Connors noted that wars are typically financed through increased borrowing. As governments issue more debt to fund military operations, the supply of dollars circulating in the financial system rises, which can weaken the currency’s purchasing power and make alternative assets like Bitcoin more attractive.
“Liquidity drives bitcoin,” Connors said in an interview. He previously served as head of research at 3iQ and global head of portfolio and risk advisory at Credit Suisse, and now runs a bitcoin advisory firm called Risk Dimensions.
If the conflict lasts several months, Connors expects U.S. government spending to accelerate as the country finances military operations. “If the war runs longer, that means more spending and more deficit spending,” he said, adding that such conditions tend to be positive for Bitcoin.
The U.S. debt burden has already been rising quickly. Connors said federal debt has been expanding at an annualized pace of about 14% since mid-2025, and if the trend continues the total could grow roughly 15% year over year.
Market movements on Monday appeared to reflect some of those dynamics. Bitcoin rallied overnight and into the U.S. morning session as investors shifted capital away from equities and adjusted portfolios amid the possibility of a prolonged conflict. Since the first U.S. strike on Iran, the cryptocurrency has gained about 3.6%.
Connors acknowledged that a sharp rise in oil prices driven by the conflict could complicate the outlook by pushing inflation higher. However, he argued that even a stagflationary environment—where economic growth slows while prices continue to rise—could still support Bitcoin.
In such circumstances, policymakers may prioritize financial stability and government financing over strictly controlling inflation.
Connors also said the Federal Reserve effectively operates with a third, informal mandate beyond its traditional goals of maintaining price stability and maximizing employment: ensuring the smooth functioning of financial markets, particularly the U.S. Treasury market.
He pointed to past episodes such as the 2019 repo market crisis and the regional banking turmoil in 2023 that followed aggressive interest rate hikes as examples of disruptions policymakers are keen to avoid.
“The Fed has to make sure the Treasury market functions,” Connors said.
That reality could push policymakers toward lower interest rates over time, especially as the government increasingly relies on issuing short-term Treasury bills rather than long-term bonds. Lower rates could become even more likely if Kevin Warsh, reportedly favored by Donald Trump in part for his dovish policy stance, becomes chair of the Federal Reserve in May, pending Senate confirmation.
With a larger share of government debt rolling over more frequently, cutting short-term rates would directly reduce borrowing costs for the U.S. government.
If interest rates fall while fiscal deficits continue to expand, liquidity in financial markets would likely increase — a combination Connors believes tends to benefit Bitcoin.
“When rates go lower and debt keeps rising,” he said, “that’s usually the kind of backdrop where bitcoin performs well.”
