Bitcoin (BTC) is currently priced at $69,040.19, and analysts suggest it could see gains if the potential conflict between the U.S. and Iran extends over the coming months. Mark Connors, a macrostrategist and head of Risk Dimensions, emphasizes that escalating government spending, rising national debt, and lower interest rates create a favorable environment for the cryptocurrency.
In discussing the financial implications of prolonged conflicts, Connors noted the high costs associated with war and the consequential increase in government debt, which generally leads to greater dollar supply in the financial system. “Wars are expensive, and financing them typically requires governments to issue more debt,” he explained. This increase in the money supply tends to debase the value of existing dollars, thereby benefiting non-dollar assets like Bitcoin.
Connors pointed out that if the U.S. continues to finance military operations, deficit spending could accelerate. He stated, “If the war runs longer, that means more spending and more deficit spending. That’s constructive for bitcoin.” The current trajectory of U.S. federal debt is alarming, rising at an annualized pace of approximately 14% since mid-2025, with expectations that this could result in a year-over-year debt increase of about 15%.
The cryptocurrency market has already begun reflecting this trend. Recently, Bitcoin experienced a rally as investors withdrew funds from equities and adjusted their portfolios in anticipation of a prolonged conflict. Since the initial U.S. strike on Iran, the digital currency has climbed by 3.6%.
However, the potential for rising oil prices due to conflict could present challenges by increasing inflation. Nonetheless, Connors remains optimistic, arguing that even in stagflationary conditions—where economic growth slows while prices increase—Bitcoin could still thrive. He believes that in such scenarios, policymakers may prioritize financial stability and government financing over the singular focus on controlling inflation.
Furthermore, Connors remarked on the Federal Reserve’s evolving role, suggesting that its objectives now extend beyond maintaining stable prices and maximum employment. He emphasized the importance of ensuring the smooth functioning of financial markets, particularly within the Treasury market. The Fed is precluded from allowing disruptions akin to the 2019 repo market crisis or the regional bank failures seen earlier this year.
This evolving financial landscape may require policymakers to lower interest rates, particularly as the U.S. government begins prioritizing short-term Treasury bills over long-term bonds. A potential shift in leadership at the Fed could also influence this trajectory; if Kevin Walsh, who has a dovish stance, is confirmed as chair, it could expedite this process. Lower interest rates in the context of rising deficits would likely improve liquidity conditions, a combination that Connors believes historically favors Bitcoin.
“When rates go lower and debt keeps rising, that’s the backdrop where bitcoin tends to perform well,” Connors concluded, reinforcing his optimistic outlook for the cryptocurrency in light of these macroeconomic factors.
