Macro strategist Mark Connors says Bitcoin could benefit if tensions between the United States and Iran turn into a prolonged conflict, as increased government spending, expanding debt and potentially lower interest rates could create favorable conditions for the cryptocurrency.
Connors said wars are costly and are typically financed through government borrowing. When governments issue more debt to fund military operations, the supply of dollars in the financial system increases, which can weaken the currency’s value and boost alternative assets such as Bitcoin.
“Liquidity drives bitcoin,” Connors said in an interview. He previously served as head of research at 3iQ and as global head of portfolio and risk advisory at Credit Suisse, and now runs a bitcoin-focused advisory firm called Risk Dimensions.
If the conflict extends over several months, Connors expects U.S. deficit spending to rise as the government 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 supportive for Bitcoin.
The U.S. debt burden has already been increasing rapidly. Connors noted that federal debt has been growing at an annualized pace of about 14% since mid-2025. If that trend continues, total debt could rise roughly 15% year over year.
Market activity on Monday appeared to reflect some of these dynamics. Bitcoin rallied overnight and into the U.S. morning session as investors shifted capital away from equities and repositioned portfolios amid concerns that the conflict could drag on. Since the first U.S. strike on Iran, the cryptocurrency has gained around 3.6%.
Connors acknowledged that a surge in oil prices triggered by the conflict could complicate the economic outlook by pushing inflation higher. However, he argued that even a stagflationary environment—where economic growth slows while prices continue rising—could still support Bitcoin.
In such a scenario, policymakers may focus more on maintaining financial stability and government financing than on fighting inflation alone.
Connors also suggested that the Federal Reserve effectively operates with an additional, unofficial mandate beyond its traditional goals of stable prices and maximum employment: ensuring that financial markets, particularly the U.S. Treasury market, function smoothly.
He pointed to past disruptions such as the 2019 repo market crisis and the regional banking turmoil seen in 2023 following aggressive interest-rate hikes as events policymakers are keen to avoid repeating.
“The Fed has to make sure the Treasury market functions,” Connors said.
That constraint could push policymakers toward lower interest rates over time, particularly as the government increasingly relies on issuing short-term Treasury bills instead of longer-term bonds. Lower rates could become even more likely if Kevin Warsh, reportedly favored by Donald Trump in part for his dovish stance, becomes chair of the Federal Reserve in May, pending Senate confirmation.
With a larger share of U.S. debt rolling over quickly, lowering short-term interest rates would directly reduce the government’s borrowing costs.
If interest rates decline while deficits continue expanding, liquidity conditions in financial markets would likely improve—a combination Connors believes tends to support Bitcoin.
“When rates go lower and debt keeps rising,” Connors said, “that’s typically the kind of environment where bitcoin performs well.”
