Bitwise CIO Matt Hougan argues that Bitcoin’s recent rally to nearly $75,000 is driven by geopolitical instability, challenging the view of Bitcoin as a pure risk asset. He states the cryptocurrency is benefiting from its dual role as a store of value and a potential currency for international transactions, especially as conflicts expose weaknesses in dollar-dominated financial systems.
Bitcoin has climbed 13% to nearly $75,000 since recent Middle East tensions escalated, while traditional assets like the S&P 500 declined. This divergence challenges the long-standing assumption that Bitcoin behaves solely as a risk asset during geopolitical crises.
Matt Hougan explains the move centers on Bitcoin’s dual use cases. He states it acts as a store of value similar to gold while holding potential as a currency for international transactions.
Geopolitical conflict strengthens both roles by increasing demand for alternative stores of value. It also exposes weaknesses in the global financial system’s reliance on dollar-based rails, a trend accelerated after Russia’s invasion of Ukraine.
The removal of Russian banks from SWIFT demonstrated that dollar-tied infrastructure can be restricted for political reasons. This prompted nations like China and Russia to move trade away from the dollar toward local currencies.
Hougan argues these shifts highlight demand for a payment method not controlled by any single country. An apolitical alternative like Bitcoin becomes more relevant, increasing its potential for use in cross-border transactions alongside existing systems.
The current Iran conflict provides an example, with reports its oil agency considered collecting toll payments in Bitcoin. Hougan maintained Bitcoin does not remove regulatory obligations, as transactions are visible on the blockchain.
He compared Bitcoin to an out-of-the-money call option whose value increases with the probability of its use as a currency. Geopolitical conflict raises this probability by creating uncertainty and pushing countries to consider alternatives.
