Bitcoin stands to gain if tensions between the U.S. and Iran drag on for months.

Macro strategist Mark Connors says Bitcoin could benefit if tensions between the United States and Iran evolve into a prolonged conflict, arguing that war-related spending, rising government debt and lower interest rates would create conditions that have historically supported the digital asset.

Connors said wars tend to be extremely costly, often forcing governments to finance military operations by issuing large amounts of new debt. As borrowing increases, the supply of dollars in the financial system expands, potentially weakening the value of existing currency and boosting alternative assets such as Bitcoin.

“Liquidity drives bitcoin,” said Connors, who previously served as head of research at 3iQ and global head of portfolio and risk advisory at Credit Suisse. He now runs a bitcoin-focused advisory firm, Risk Dimensions.

If the conflict continues for several months, Connors expects U.S. government spending to rise as military operations expand. “If the war runs longer, that means more spending and more deficit spending,” he said. “That’s constructive for bitcoin.”

U.S. government debt has already been growing rapidly. Connors noted that federal debt has been increasing at roughly a 14% annualized pace since mid-2025, and if that trend persists, the total could climb about 15% year over year.

Market activity on Monday appeared to reflect some of those dynamics. Bitcoin climbed overnight and into the U.S. trading session as investors shifted capital out of equities and repositioned portfolios amid the risk of an extended geopolitical conflict. Since the first U.S. strike on Iran, the cryptocurrency has gained roughly 3.6%.

Connors acknowledged that a war-driven spike in oil prices could complicate the outlook by pushing inflation higher. Still, he argued that even a stagflationary environment—where economic growth slows while prices rise—could ultimately support Bitcoin.

In such circumstances, policymakers may focus more heavily on preserving financial stability and maintaining government financing rather than strictly combating inflation.

Connors also argued that the Federal Reserve effectively operates with an additional responsibility beyond its traditional mandates of price stability and maximum employment: ensuring that financial markets, particularly the U.S. Treasury market, continue to function smoothly.

He pointed to past disruptions such as the 2019 repo market crisis and the regional banking turmoil in 2023 that followed aggressive rate hikes. Authorities, he said, cannot afford to allow similar breakdowns in the financial system.

“The Fed has to make sure the Treasury market functions,” Connors said.

That reality could push policymakers toward lower interest rates over time, particularly as the government increasingly relies on issuing short-term Treasury bills rather than longer-term bonds. Lower rates could also become more likely if Kevin Warsh, reportedly favored by Donald Trump for his relatively dovish stance, is confirmed by the Senate as the next chair of the Federal Reserve in May.

With a growing share of government debt rolling over more frequently, reducing short-term interest rates would directly lower the government’s borrowing costs.

If interest rates decline while fiscal deficits continue to expand, overall liquidity in financial markets would likely increase—conditions that Connors believes tend to favor Bitcoin.

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