Former macro investor and hedge fund manager James Lavish warns that markets may be underestimating the risk of a prolonged Iran conflict. Investors, he says, appear positioned for a quick resolution; if the fighting drags on and keeps upward pressure on oil, the result could be a renewed inflation shock, revived stagflation worries and a broad repricing across global assets.
That outcome would squeeze the Federal Reserve: it would be difficult to hike aggressively without pushing the economy into recession, yet impossible to cut policy rates while inflation stays elevated. Lavish points out that Bitcoin (BTC) has recently diverged from gold and equities in its price action, but cautions that in a true ‘‘correlation-to-one’’ panic—when everything sells off together—Bitcoin’s relative resilience could evaporate. He estimates that in a deeper market drawdown Bitcoin could fall another 10%–20%, potentially testing the low $50,000s or high $40,000s.
Despite the near-term risk, Lavish remains constructive on Bitcoin over the long run. He argues that a war-driven sell-off would not invalidate Bitcoin’s fundamental case and could instead present a significant buying opportunity for patient investors. His practical advice: avoid being overly levered, but also avoid being completely unexposed in a market environment dominated by geopolitical headlines, bond stress and shifting Fed expectations.
The conversation also touches on safe-haven strategies, energy market dynamics, Treasury yields and the implications of money printing. Watch the full interview on our YouTube channel and consider subscribing for more discussions. This interview has been edited and condensed for clarity.