Bitcoin may emerge as the biggest beneficiary if the U.S.–Iran conflict stretches on for months.

Macro strategist Mark Connors believes Bitcoin could benefit if tensions between the United States and Iran evolve into a prolonged conflict, arguing that wartime spending, expanding government debt and lower interest rates could create a favorable environment for the cryptocurrency.

Connors said wars are typically financed through increased government borrowing. As governments issue more debt to fund military operations, the supply of dollars in the financial system rises, which can dilute the value of existing currency and potentially 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 continues for several months, Connors expects U.S. government spending to rise as the country finances ongoing military operations. “If the war runs longer, that means more spending and more deficit spending,” he said. “That’s constructive for bitcoin.”

The U.S. government’s debt burden has already been expanding rapidly. Connors noted that federal debt has been growing at roughly a 14% annualized pace since mid-2025, and if the trend continues the total could rise by about 15% year over year.

Recent market moves appear to reflect some of those dynamics. Bitcoin rallied overnight and into the U.S. trading session Monday as investors rotated out of equities and adjusted portfolios amid the possibility of an extended conflict. Since the first U.S. strike on Iran, the cryptocurrency has climbed about 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 end up supporting Bitcoin.

In such a scenario, policymakers may prioritize financial stability and government financing over strictly fighting inflation.

Connors added that the Federal Reserve effectively operates with a third, unofficial mandate beyond its traditional goals of stable prices and maximum employment: ensuring the smooth functioning of financial markets, particularly the U.S. Treasury market.

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. Authorities, he said, cannot allow similar stress to destabilize the financial system.

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

That reality could eventually push policymakers toward lower interest rates, particularly as the government shifts toward issuing more short-term Treasury bills rather than longer-dated bonds. Lower rates could become even more likely if Kevin Warsh, reportedly favored by Donald Trump in part for his dovish views, becomes chair of the Federal Reserve in May, pending Senate confirmation.

With a larger portion of U.S. debt rolling over frequently, reducing short-term interest rates would directly lower the government’s borrowing costs.

If interest rates decline while fiscal deficits continue expanding, liquidity in financial markets would likely increase—a combination Connors believes tends to support Bitcoin.

“When rates fall and debt keeps rising,” Connors said, “that’s typically the kind of backdrop where bitcoin performs well.”

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