Bitcoin has posted a 12.25% rally since late February, coinciding with the escalation of military action between the US, Israel, and Iran. This upward move has come as a surprise to those who expected Bitcoin to underperform during periods of geopolitical tension, especially compared to traditional assets like gold, which has declined 8.69% in the same span, and the S&P 500, up only 1.29%.
Changing views on bitcoin’s use cases
Matt Hougan, Chief Investment Officer at Bitwise Asset Management, argues this rally is not a random spike in price but instead signals a fundamental shift in how Bitcoin is valued by the market. Bitwise is a prominent crypto investment firm known for launching one of the first spot Bitcoin ETFs in the US market and managing a wide range of digital asset strategies for institutional clients.
Hougan believes the market is finally recognizing a “two bets in one” framework for Bitcoin. While the leading cryptocurrency has long been described as a digital form of gold and a hedge against fiat debasement, recent developments appear to highlight a broader potential role.
For years, Bitcoin’s appeal centered around its potential to compete with physical gold in the global “store of value” market, which has an estimated size of $38 trillion. Hougan sees this narrative as only part of the story. The rise in geopolitical risk has put a spotlight on Bitcoin’s possible use as an actual medium of exchange on the international stage.
“Some have argued that geopolitics is irrelevant for bitcoin, while others have pointed out that war often leads to money printing, which tends to boost bitcoin in the long term. Both arguments are wrong. Bitcoin’s strength during this crisis stems directly from the conflict itself,” Hougan observed.
Iran’s new bitcoin toll and global implications
A major driver of this shifting outlook is Iran’s decision to implement a toll on ships crossing the Strait of Hormuz, demanding $1 per barrel, with payment accepted in Bitcoin. This marks a rare case of a major government using Bitcoin in global trade, raising new questions around international finance and sanctions enforcement.
Hougan suggests that this development demonstrates how Bitcoin might act as an “apolitical alternative” in a world where financial systems are increasingly used as instruments of national power. The earlier removal of Russian banks from the SWIFT network in 2022 prompted some countries to seek alternatives outside the US-dominated ecosystem, further supporting Bitcoin’s appeal as a neutral settlement layer.
“At the same time, it points to a reality that transcends the current conflict: In a world where countries have weaponized their financial rails, bitcoin is emerging as an apolitical alternative,” Hougan explained.
Hougan frames this potential through options pricing: A “call option” on Bitcoin acting as currency is becoming more valuable as global financial uncertainties mount. The move by Iran, combined with other nations’ shifts away from established payment channels, adds credibility to Bitcoin’s currency use case and not just its value as a store of wealth.
While this new narrative does not diminish Bitcoin’s digital gold thesis, it could radically increase potential market value. Should Bitcoin continue gaining ground as both a store of value and a functional means of settlement, traditional price targets that benchmark solely against gold might soon require significant revision.
“We’ve spent the past five years talking about bitcoin exclusively as a ‘store of value.’ If bitcoin starts to take on a dual role as both a store of value (like gold) and an actual currency (like the dollar), we may need to revise our targets higher,” Hougan stated.
